Dragonfly Doji: identification, meaning and where it fails

What it measures

A dragonfly doji is a doji whose open, close and high all sit at essentially the same price, with a long lower wick beneath it — the visual signature of a session that sold off hard and then recovered the entire move by the close.

It measures a specific kind of rejection: sellers pushed price down, and buyers took it all the way back before the bar closed.

How it is calculated

These are the steps Basis performs, verified against the published definition.

1. 1

   Confirm the bar qualifies as a doji — open and close within a small fraction of the total range.

2. 2

   Require the upper wick to be minimal to absent.

3. 3

   Require the lower wick to be a large multiple of the body, typically at least two to three times its size.

How to read it

• At the bottom of a decline, a dragonfly doji says sellers ran out of follow-through exactly where they pushed hardest — a candidate for a low, not a confirmed one.
• The longer the lower wick relative to recent bars, the more participation was required to reject that level.
• In the middle of a range or an uptrend, the same shape is far less meaningful — it is simply what a quiet bar with one wick looks like.

Where it misleads

Related indicators