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Figure 1. Dragonfly Doji (basic candle).
Japanese name: taketombo
Forecast: lack of determination
Trend prior to the pattern: n/a
Opposite candlestick: Gravestone Doji
Construction:
- Opening, closing and maximum prices are the same or very similar
- Long lower shadow
- appears on as a long line
Dragonfly Doji is a basic candle shaped like a Hanging Man pattern (in an uptrend) or Takuri Line (in a downtrend). Due to the identical opening and closing prices, it is classified as a doji candle. The Japanese name means not only "dragonfly", but also a bamboo-copter or bamboo dragonfly (jap. taketombo, 竹蜻蛉), which is a toy helicopter rotor that flies up when its shaft is rapidly spun. Shimizu notes that the market after the appearance of the Dragonfly Doji may behave as unpredictably as the toy –- they both rise and fall.
Morris, on the other hand, draws attention to the fact that the candle of this kind can announce a reversal after a long downtrend, especially so when the lower shadow is very long – then we have the pattern called Takuri Line. A tiny difference between the opening and closing is accepted (please check The Problem with Doji Candles for more details).
Figure 2. The first occurrence of the Dragonfly Doji is classic: the opening, closing and high prices are identical. The second occurrence of the Dragonfly Doji shows some flexibility in qualifying doji candles. The bottom shadow accounts to 97.3% of the whole candle height (meaning that the rest belongs to the candle's body). Opening price is 11.93, the closing and high is 11.95 and the low price is 11.20.
