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Hammer / Dragonfly Doji Bullish


Pattern: Reversal
Trend: Bullish
Reliability: Low/Moderate

How to Identify it

  • Small real body at the upper end of the trading range
  • Lower shadow at least twice as long as the real body
  • No (or almost no) upper shadow

What it Means

There is a sharp sell off after the market opens during a downtrend. However, by the end of the trading day, the market closes at or near its high for the day. This signifies a weakening of the previous bearish sentiment, especially if the real body is white (the close is higher than the open price). Since the certainty for a Hammer indicator is low, the trend reversal can be confirmed by a higher open and an even higher close on the next trading day. If the open and the close are identical, the indicator is considered a Dragonfly Doji. The Dragonfly Doji has a higher reliability associated with it than a Hammer.

 


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