A trader can long a stop loss below the low of a bullish dragonfly or short a stop loss above the high of a bearish dragonfly. A dragonfly doji is considered a signal of a potential reversal in the security price. It occurs when the open, close, and high prices of a security are virtually Doji Candlestick Pattern the same. Thus, a dragonfly doji is T-shaped without an upper tail, but only a long lower tail. This particular trade resulted in a win for a total of $360 USD. Obviously, this is just one example and in no way suggests or constitutes a standalone trading strategy or methodology.

The Doji candlestick, also called a Doji star, shows indecision between buyers and sellers in the crypto market. This type of candlestick is confirmed on a technical analysis chart when the opening and closing prices are almost identical. A Dragonfly Doji is a type of candlestick pattern that can signal a potential reversal in price to the downside or upside, depending on past price action.

Gravestone doji

Conversely, a filled body indicates a drop in the asset price. The bottom of the lower tail tells the lowest asset price traded during that period.

• The price that is moving higher after the dragonfly doji is called a confirmation, which helps to confirm this interpretation of the price action​​.
• Long-legged doji represent a more significant amount of indecision as neither buyers nor sellers take control.
• But this time around, the upper and lower wick is very long, they are very long.
• The opposite of a morning star is an evening star pattern.

In other words, a single doji is a just a small piece of the puzzle in helping a trader determine a higher probability point at which to either or enter, and/or exit a position. Long-legged doji represent a more significant amount of indecision as neither buyers nor sellers take control. Gravestone doji indicate that buyers initially pushed prices higher, but by the end of the session sellers take control driving prices back down to the session low. Dragonfly doji indicate that sellers initially drove prices higher, but by the end of the session buyers take control driving prices back up to the session high. So for example, if the market is in a downtrend, you can look for it to pull back to a moving average, pullback to previous support turned resistance, or whatever. Based on the looks of this candlestick in itself, this is a sign of strength because the buyers have pushed the price up higher on the last minute.

Pros and cons of Doji

One thing to share first is don’t make this mistake when you’re trading the https://www.bigshotrading.info/. One thing to take note is that a Doji has no body on the candlestick pattern. Because in this post, I’ll reveal the answers and teach you everything I know about the Doji candlestick pattern — so you can finally trade it like a pro. StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider.

A doji could be formed by prices moving lower first and then higher second. If it forms a doji during an uptrend, it is a bearish and vice versa. Accurate – Although it is not always accurate, Doji is usually better to use than other candlestick patterns.