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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Dragonfly Doji

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Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 05/26/2017
21,080 -2.67 0.0%
9,176 12.36 0.1%
720 -0.08 0.0%
6,210 4.93 0.1%
2,416 0.75 0.0%
YTD
6.7%
1.5%
9.2%
15.4%
7.9%
Tom's Targets    Overview: 05/15/2017
21,400 or 20,450 by 06/01/2017
9,500 or 8,700 by 06/01/2017
730 or 700 by 06/15/2017
6,350 or 6,000 by 06/01/2017
2,450 or 2,375 by 06/15/2017

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

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The dragonfly doji is an interesting name for a candle that is supposed to act as a bullish reversal. It is a reversal candle, but only half the time. Random, in other words. If you see a dragonfly doji in the bush, do not be frightened. The 10-day performance after the breakout ranks it 98th out of 103 candles, where 1 is best. In other words, ignore it. Its bite is usually not fatal. Usually.

Dragonfly Doji Important Results

Theoretical performance: bullish reversal during a decline, otherwise indecision
Tested performance: Reversal 50% of the time
Frequency rank: 44
Overall performance rank: 98
Best percentage meeting price target: 80% (bear market, down breakout)
Best average move in 10 days: -5.02% (bear market, down breakout)
Best 10-day performance rank: 17 (bull market, down breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal dragonfly doji candlestick
Dragonfly Doji

Dragonfly Doji Discussion

Based on how the dragonfly doji works in the marketplace, it acts as a reversal 50% of the time. Thus, it is neither a reversal nor a continuation candle. It represent indecision. Because the lower shadow is so long and the closing price is pegged at the top of the candlestick, upward breakouts predominate. A frequency rank of 44 means it is more plentiful than many other candles, so you should see it often in a historical price series. The performance rank, at 98, is near the bottom of the list. Do not expect price to trend for long after a dragonfly doji.

The 80% meeting the measure rule target is a good score. In a bear market after a downward breakout (which is rare), the decline is quite respectable: 5.02%, but the best 10-day performance rank (17) occurs after a downward breakout in a bull market. I would have expected that a bear market would score higher, but other candlesticks seem to disagree.

Dragonfly Doji Identification Guidelines

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CharacteristicDiscussion
Number of candle linesOne.
Price trend leading to the patternNone required.
ConfigurationLook for a long lower shadow with a small body (open and close are within pennies of each other).

Three Trading Tidbits for Dragonfly Doji

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Dragonfly doji that appear within a third of the yearly low perform best -- page 205.
  2. Dragonfly doji break out upward most often -- page 207.
  3. For those Dragonfly doji in which the opening and closing prices are different, white bodies perform best after upward breakouts, and those with black bodies outperform after downward breakouts -- page 207.

Dragonfly Doji Example

The dragonfly doji candlestick on the daily scale

The daily chart shows a dragonfly doji (A) at the end of an uptrend. The long lower shadow would suggest a bullish move according to some authors on candlesticks. However, when the opening and closing prices match, it speaks of indecision.

In this example, price breaks out downward and when that happens, the move can be a decent one. Price retraces about half of the prior up move before resuming the rise at a more leisurely pace.

-- Thomas Bulkowski

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Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. Thank God I'm an atheist!