A doji with a long lower shadow and virtually no upper shadow, where price fell hard and returned to close at the open and the high.
The shape is a T. Open, high and close sit at nearly the same price while the low is far below. It says sellers took price down through the period and buyers took every bit of it back.
Appearing at the bottom of a decline or at a tested support level, a dragonfly is a potential reversal candle. In the middle of a range it is noise.
Its weakness is the same as every single-candle pattern: no confirmation. Practical rules are to require the next candle to close above the dragonfly's high before entering, and to place the stop below the long lower-shadow, which is often uncomfortably far. That distance is the honest cost of the signal, and it is why many dragonfly setups have poor risk-reward-ratio even when the read is correct.
Original diagrams for the ideas on this page. Illustrative, not real market data.
The parts of a candlestick. One candle sums up a slice of time: the thick real body runs from the opening price to the closing price, and the thin wicks reach out to the highest and lowest prices traded. Colour tells you which way the body ran.
Educational only, not advice. Spotted an error? Post in Site Feedback.