What describes a Dragonfly Doji?

A Dragonfly Doji is characterized by its distinctive shape, which occurs when the open and close prices are located at or near the high of the trading range for the given period, resulting in a specific candlestick formation. This formation indicates a potential reversal or indecision in the market. Typically, a Dragonfly Doji has a long lower shadow with little to no upper shadow, reflecting that prices dropped significantly during the session but rallied back to the opening level, suggesting buying pressure.

While the other options touch on various aspects of candlestick patterns, they don't accurately encapsulate what defines a Dragonfly Doji. For instance, the correct understanding focuses on the relationship between the open, close, and high prices, which is critical for recognizing this specific candlestick’s implications in market sentiment.