Independent Forex Trading

Dragonfly Doji

The dragonfly doji candlestick pattern represents an indecisive market. It is represented by a long lower tail, a small body with equal open and close prices, and no upper tail.


Dragonfly Doji Candlestick Analysis

The dragonfly doji candlestick pattern provides clues for a possible reversal in trend. When the dragonfly doji appears in an uptrend - look for a pending reversal to the downside, conversely, when the dragonfly doji appears in a downtrend – look for a pending reversal to the upside.


The dragonfly doji candlestick pattern becomes increasingly relevant when the following occur:

  • The dragonfly doji is has a long lower tail, a body composed of equal open and close values, and no upper tail.
  • It is preceded by a strong trend.
  • Confirmation candles are used to confirm the reversal.
  • Overbought or oversold indicators confirm a change in market direction.

Forex Trading Ideas

The dragonfly doji may be traded alone, or with a combination of signals and/or indicators. For example:

  • Step 1 – Wait for a dragonfly doji to appear during an established trend.
  • Step 2 - Confirm the trend reversal with at least one confirmation candle.
  • Step 3 – Further confirm overbought or oversold conditions using the RSI – Relative Strength Index*
  • Once conditions 1 – 3 are met place an entry order.

*Additional confirmation ideas – confirm the dragonfly doji formation when it appears outside of the Bollinger Band or when the Stochastic Oscillator signals overbought or oversold conditions.

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By adding additional confirmation signals and indicators the dragonfly doji has the potential to become increasingly accurate in predicting trend reversals and entry points. FxSpyder provides integrated customization tools for hands free trade automation using the JavaScript Object Model. Full details are included in the Help Section of the FxSpyder trading application.

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