Bullish Dragonfly Doji Pattern
BULLISH DRAGONFLY DOJI PATTERN (BDDP)
the shorts having the incentive to cover their short positions
1.The market is on an overall downtrend;
2.There is a Doji at the upper end of the trading range; and
3.The Doji has an extremely long lower shadow but does not have an upper shadow.
The BDDP is a single stick pattern that occurs during a downtrend. The market here is in an overall bearish mood. Then the market opens and sells off sharply. But the sell-off suddenly stops and the prices now start going up and close near the day’s high (thus, the long lower shadow). The failure of the market to go on selling diminishes the bearish feeling. If the market opens higher the next day, many shorts will have a big incentive to cover their short positions.
1.The BDDP is more bullish than the Bullish Hammer Pattern
2.The pattern’s reliability is high, but a confirmation of the trend reversal is still recommended (through a white stick, a large gap up or a higher close on the next trading day.