What it looks like
Open and close are at the same price, or almost, and both sit at the top of the candle. There is a long lower wick and no real upper wick. A doji is a candle whose open and close are nearly equal. It matters most after a fall.
What it means
Sellers drove price down during the candle, then buyers brought it all the way back to where it opened. Sellers gained nothing. It is one of the gentler signals: a hint the fall is tiring and no more than that, because buyers only got back to even.
How to trade it
- 1
Do not trade it on its own.
- 2
Confirm: wait for a candle that closes above the dragonfly doji's high.
- 3
Enter: buy on that close, with a stop just below the doji's low.
- 4
Target: aim for 2 times the stop, or the nearest swing high.
- 5
Example: on the gold 15 minute chart a dragonfly doji has a 6 point lower wick. The next candle closes above its high; you buy with a 7 point stop below the low and aim 14 points higher.
A close below the dragonfly doji's low. Sellers have broken through the level they were pushed back from.
Where it works best
At a floor after a fall, such as a prior swing low, the previous day's low or a pivot. In a sideways market it is just indecision.
WickSpeak finds the dragonfly doji automatically on any chart and names it on the candles that made it. Next to the name it writes what the pattern is, how to trade it and what proves it wrong, so you never have to guess the rule. In Playbook you can use the dragonfly doji, or any of the 146 patterns, as a condition alongside up to 12 conditions on any of 12 timeframes, then backtest it on past candles with your costs.
Common mistakes
- Buying the doji before a candle closes above its high.
- Calling it bullish at the top of a rise, where it means much less.
- Using a stop inside the wick instead of below the low.
Related patterns
Questions traders ask
Is a dragonfly doji bullish?
After a fall it is a mild bullish hint. It needs a candle closing above its high before it becomes a buy.
What is the difference between a dragonfly doji and a hammer?
A hammer has a small body near the top. A dragonfly doji has almost no body, with open and close at the high. Both show rejected lower prices; we treat the dragonfly as the gentler of the two.
What is a doji?
A doji is a candle whose open and close are at nearly the same price. It shows neither side won the candle.
What cancels a dragonfly doji?
A close below its low. That means sellers pushed past the level they were rejected from.