Dragonfly Doji
Reference values based on Bulkowski's "Encyclopedia of Chart Patterns". Data is primarily from U.S. markets and may differ for other markets.
A variant of the doji with a long lower shadow, where the open, close, and high are at approximately the same price level. It indicates that heavy selling occurred during the session but was completely reversed by the close. When appearing at the bottom of a downtrend, it suggests selling pressure is exhausting and serves as a strong bottoming signal.
Enter long when the next candle after the Dragonfly Doji closes as a bullish candle. Entering when price exceeds the Dragonfly Doji's high is also effective.
Project 1 to 1.5 times the lower shadow length (high to low) upward from the high to determine the price target. Or target the nearest resistance line.
Place a stop-loss slightly below the low (the tip of the lower shadow) of the Dragonfly Doji.
High volume when the Dragonfly Doji appears increases the reliability of the bottoming signal. Heavy volume with a long lower shadow indicates that selling was absorbed.