Long-legged doji candlesticks are a member of the doji family. They are indecision candlesticks with a small real body, a long lower shadow, and a smaller upper wick. They can be found in up-and-down trends and are bullish or bearish coloring on stock charts. Long-legged doji candlesticks tell the story of indecision.
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What Are Long Legged Doji Candlesticks?
The long-legged doji candlesticks have long upper and lower shadows with an open and closing price that was the same. This makes the shape of a cross more defined than the smaller doji. This is because the open and closing prices are virtually the same. So the real body is just a line.
Long legged doji candlesticks are super indecisive. The open and closing price are the same. The upper and lower shadows or tails, also known as wicks, show the high and low of the day.
Long legged dojis show you that no one won with all that fighting between the bulls and bears. They’re the most significant during a long-term upward or downward trend. Trading is all about supply and demand. More demand for a stock with a lessening supply shoots the price up or down when supply and demand are nearing equilibrium, long legged doji candlesticks form.
How to Trade Long Legged Doji Candlesticks
- Traders take a long position when the price breaks above the candlestick’s high.
- They use a candlestick close below the low as a stop level.
- To take a short at the break of the low and use a candlestick close above high as a stop
Patterns Within Patterns
Being able to find patterns within patterns is important. Whether looking for a long-legged doji bullish pattern or confirming a trend, finding patterns within patterns is good.
These doji candles can look the same because of their small regular bodies. It is important to remember not to get caught up in exactly what these candlesticks look like. Instead, look at the overall patterns.
Long legged dojis can be found in any timeframe on a chart but are the best on long-term charts. This is because more traders are participating, which in turn, gives more information.
As we learned earlier, the long legged doji candlesticks are best used on time frames like the daily chart. There is more information on these charts that confirm a reversal.
It is a bit difficult trading this candlestick pattern because of the long lower shadow and upper wicks. In addition, it makes risk management a bit challenging because there can be a lot of price action built into one candle.
Sometimes it is best to wait for a better confirmation candle to take a trade. Taking entries on smaller candlesticks is a good practice to help manage risk properly.
