Dragonfly & Gravestone Doji Candlestick | How to recognize & trade

Dragonfly & Gravestone Doji Candlestick | How to recognize

What is a Dragonfly Doji?
A Dragonfly Doji is a type of candlestick pattern that can signal a potential reversal in price to the downside or upside, depending on past price action. It's formed when the asset's high, open, and close prices are the same. The long lower shadow suggests that there was aggressive selling during the period of the candle, but since the price closed near the open it shows that buyers were able to absorb the selling and push the price back up. Following a downtrend, the dragonfly candlestick may signal a price rise is forthcoming. Following an uptrend, it shows more selling is entering the market and a price decline could follow. In both cases, the candle following the dragonfly doji needs to confirm the direction.

KEY TAKEAWAYS
A dragonfly doji can occur after a price rise or a price decline.
The open, high, and close prices match each other, and the low of the period is significantly lower than the former three. This creates a "T" shape.
The appearance of a dragonfly doji after a price advance warns of a potential price decline. A move lower on the next candle provides confirmation.
A dragonfly doji after a price decline warns the price may rise. If the next candle rises that provides confirmation.
Candlestick traders typically wait for the confirmation candle before acting on the dragonfly doji.

What is a Gravestone Doji?
A gravestone doji is a bearish reversal candlestick pattern that is formed when the open, low, and closing prices are all near each other with a long upper shadow. The long upper shadow suggests that the bullish advance in the beginning of the session was overcome by bears by the end of the session, which often comes just before a longer term bearish downtrend.

KEY TAKEAWAYS
A gravestone doji is a bearish pattern that suggests a reversal followed by a downtrend in the price action.
A gravestone pattern can be used as a sign to take profits on a bullish position or enter a bearish trade.
The opposite of a gravestone doji is a dragonfly doji

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