A Doji forms at the upper end of the trading range with a long lower shadow
(the longer the more bullish).
In a downtrend or within a pullback of an uptrend, a sharp intraday sell-off
is followed by a reversal which causes the stock to close at its opening
price near the day’s high. This hints at the possibility of a reversal.
Bulls most likely were shaken out by the intraday weakness, and shorts
start getting a little worried with the bounce. A strong following day
on solid volume is needed to confirm the pattern.
The bullish Dragonfly Doji is similar to the bullish Hammer, bearish Hanging
Man, and bearish Dragonfly Doji.