#4: Dragonfly Doji
I don’t know why it is called a dragonfly doji cuz it doesn’t even look like a dragonfly at all.
Joke aside, this is what an ideal dragonfly doji pattern looks like:
The important thing to note here is that the dragonfly doji has a long lower shadow (or wick as it is sometimes called) and then open price=close price=high price in an ideal case scenario.
But in the real forex market, there can be a little bit of wick sticking out on the “high price”.
But for what its worth, the dragonfly doji is also one very very important doji you need to be aware of and there are two types:
- one that forms in an uptrend
- one the forms in a downtrend
Now, let me talk about each of these two cases:
- if a dragonfly doji forms in an uptrend, and if that happens to be in some sort of resistance level, I consider it as bearish signals. I would be looking to sell on the breakout of the low of that dragonfly doji.
- if a dragonfly doji forms in a downtrend and it happens to form in some sort of support level, I consider that as a bullish signal. I would be looking to buy on the breakout of high of that dragonfly doji.