The Dragonfly Doji forms when the open, close, and high are all at or near the same price level, with a long lower wick extending well below the body — the exact mirror image of the Gravestone Doji. Appearing at the bottom of downtrends, it signals that sellers tried to drive price lower during the session but buyers completely erased the losses by the close.

How to Identify

• Open and close are at or very near the high of the session
• Long lower wick — typically 2x or more the average candle range
• Little to no upper wick (the defining feature)
• Appears after a sustained downtrend or at a clear support level
• Body color is irrelevant — the wick structure is the signal

Market Psychology

Bears push price aggressively lower during the session (the long lower wick shows how far they got). But by the close, buyers completely overwhelmed sellers and drove price all the way back to the session high. The bears mounted a dramatic offensive and lost everything — a warning that downside momentum has collapsed and buyers are asserting control at this price level.