Dragonfly Doji

The Dragonfly Doji is a candlestick patterns indicator used in Skyrexio Strategy Builder for pattern recognition and reversal/continuation signals.

Introduction

The Dragonfly Doji is a bullish reversal candlestick pattern that signals potential LONG opportunities or SHORT position exits. This single-candle pattern features open, high, and close prices at the same level with a long lower shadow, indicating strong rejection of lower prices and potential buying interest.

How Dragonfly Doji Works

Dragonfly Doji is a single-candle bullish reversal pattern with specific characteristics:

• Open, high, close equal - These three prices are at the same level • Long lower shadow - Significant lower shadow showing price rejection • No upper shadow - Little to no upper shadow • T-shaped appearance - Creates a distinctive T or dragonfly shape • Context matters - Most effective at support levels or after downtrends

Pattern Psychology: The pattern shows sellers drove price significantly lower during the session, but buyers stepped in with such force that they pushed price all the way back to the opening level. This complete rejection of lower prices demonstrates strong buying interest.

Key Characteristics

Attribute	Details
Category	Candlestick Patterns
Type	Bullish Reversal Signal
Primary Use	LONG entries, SHORT exits
Timeframe	All timeframes supported (1m to 1M)
Confirmation	Volume, support levels, trend context

Strategy Applications

🟢 LONG STRATEGY (Primary Use)

Dragonfly Doji is primarily a LONG signal - enter long positions when the pattern appears at support levels.

Base Entry Order (LONG)

Base Order Condition: Dragonfly Doji Pattern Detected
First Condition: Dragonfly Doji
Timeframe: 1H

Additional Confirmation:
First Condition: Volume
Timeframe: 1H  
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Take Profit Orders (LONG)

Rule 1: Exit condition - Target reached at resistance level
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: High Price
Timeframe: 1H

OR

Rule 2: Exit condition - Overbought momentum warning
First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 75

OR

Rule 3: Exit condition - Bearish reversal pattern detected
First Condition: Gravestone Doji
Timeframe: 1H

Stop Loss Orders (LONG)

Rule 1: Stop loss - Pattern invalidated (price below dragonfly low)
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H

OR

Rule 2: Stop loss - Volume surge breaks bullish momentum
First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

🔴 SHORT STRATEGY (Secondary Use)

Counter-Trend Risk: Using Dragonfly Doji for SHORT entries is high-risk and should only be considered in extreme overbought conditions.

Take Profit Orders (SHORT) - Exit existing positions

Rule 1: Exit condition - Dragonfly Doji signals trend reversal
First Condition: Dragonfly Doji
Timeframe: 1H

OR

Rule 2: Exit condition - Support level reached
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: Low Price
Timeframe: 1H

Risk Management Guidelines

Position Sizing

Strategy Type	Position Size	Conditions
LONG Strategy	Standard	Pattern appears at support
SHORT Strategy	Exit signal only	Counter-trend not recommended
High Volume	Increase confidence	Can use larger size
Low Volume	Reduce size	Wait for confirmation

Best Practices

For LONG Strategies

1. Support context - Most effective at key support levels

2. Volume confirmation - Ensure higher volume on dragonfly candle

3. Shadow length - Longer lower shadow indicates stronger reversal

4. Follow-through - Confirm with next candle's bullish action

Market Conditions Analysis

Market Type	LONG Strategy Effectiveness
Downtrend	🟢 High (reversal signal)
Uptrend	🟡 Medium (continuation)
Ranging	🟢 High (at support)
High Volatility	🟢 High (clear signals)
Low Volume	🔴 Low (wait for confirmation)

Related Patterns

Pattern	Relationship	Link
Gravestone Doji	Opposite signal	Gravestone Doji
Hammer	Similar bullish signal	Hammer
Doji	Neutral variant	Doji

Conclusion

Dragonfly Doji is primarily a LONG signal indicating strong rejection of lower prices and potential upward reversal. The pattern shows powerful buying interest at lower levels.

Key Takeaways

• PRIMARY USE: LONG entries at support levels

• SECONDARY USE: SHORT exits when holding positions

• ALWAYS: Confirm with Volume and support level context

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