A Bearish Dragonfly Doji Pattern is a single candlestick pattern, which occurs at a market top or during an uptrend. The Bearish Dragonfly Doji Pattern is very similar to the Bearish Hanging Man Pattern as mentioned above. In the case of Bearish Dragonfly Doji Pattern, the opening and closing prices are identical whereas the Bearish Hanging Man Pattern is characterized by a small real body at the upper end of the trading range.

Recognition Criteria:

1. The market is characterized by an overall uptrend.
2. Then we see a Doji at the upper end of the trading range and it is located above the trend.
3. Lower shadow of the Doji is extremely long.
4. There is no upper shadow.

Explanation:

The market is in a bullish mood characterized by an uptrend. Then we see a price action characterized by a sharp sell off when it opens. Prices move down going much lower than the opening price. Then we see a rally in the closing hours of the day, which closes the day at or very near the opening price. However this end-of- day rally signifies the potential for further sell offs. The long lower shadow shows how the market started the day with a sell off. If the market opens lower the next day, we may see a lot of longs eager to sell their positions.

Important Factors:

The Bearish Dragonfly Doji Pattern is a more bearish pattern than the Bearish Hanging Man Pattern and it is also more reliable.

Confirmation of the suggested trend reversal by either a black candlestick, a large gap down or a by a lower close on the next trading day is strongly advised.