Long legged doji candlesticks are a member of the doji family. They are an indecision candlestick that has a small real body, longer lower shadow, and a smaller upper wick. They can be found in both up trends, down trends and are bullish or bearish coloring on stock charts. Long legged doji candlesticks tell the story of indecision. Watch our video on how to trade long legged doji’s.
Basics of Long Legged Doji Candlesticks
The long legged doji candlesticks have long upper and lower shadows with an open and closing price that was basically the same. This makes the shape of a cross that’s more defined than the smaller doji.
The reason for this is because the open and closing price are virtually the same. So the real body is just a line. Now, if you’ve been taking our candlestick course, you’ve probably come to realize that doji candles show indecision.
Bullish candlesticks are known as such because of the size of their real bodies. Comparatively so are the bearish candlesticks. So, by now you know the smaller the real body, the more indecision they show when stock trading.
What Long Legged Doji Candlesticks Tell Us
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 (register for our free trading courses and you’ll learn how to read the stock market).
Long legged dojis show you that with all that fighting between the bulls and bears, no one won. They’re the most significant during a long term upward or downward trend.
Trading is all about supply and demand. The more of a demand for a stock with a lessening supply shoots price up or down. When supply and demand are nearing equilibrium, long legged dogs candlesticks form.
A stocks equilibrium can be found when they’re trading at their moving averages. If a stock becomes overextended, it typically moves back to the moving average lines like the simple moving average.
We teach how to trade long legged candlesticks on our live daily streams. Check out our trading service to learn more.
How to Trade Long Legged Doji Candlesticks
- Knowing how to trade long legged doji candlesticks is quite simple:
- Traders take a long position when price breaks above the high of the candlestick.
- They use a candlestick close below the low as a stop level.
- They take a short at the break of the low and use a candlestick close above high as a stop.
Moving average lines are a common form of technical analysis. It doesn’t matter if you’re trading micro futures or stocks. Without candlesticks, those lines would be meaningless. Not only do candlesticks trade within those moving averages, candlesticks give us signals.
The real body’s and wicks of candlesticks form key levels of support and resistance. Support and resistance are really important when trading. You can also use VWAP along with the moving average lines to map out support and resistance.
Patterns Within Patterns
Being able to find patterns within patterns is important. Whether you’re looking for a long legged doji bullish pattern or confirming a trend, finding patterns within patterns is a good thing.
These doji candles can look the same because the of small regular body. It’s important to remember not to get caught up in exactly what these candlesticks look like. 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 there are more traders participating, which in turn, gives more information.
Use the long legged doji candlesticks with technical analysis. Then you have a strong reliable trading signal. Never forget though, that patterns can break down. Emotions move markets. Hence nothing is 100%. Take our free candlesticks reversals course. Long legged doji candlesticks used in conjunction with the moving averages let you know when a reversal is coming. You can see that NLSN was in a long term uptrend. The stock moved back towards the moving averages line and equilibrium. The long legged doji (highlighted) begins trading inside the moving averages signaling a reversal in trend. As you can see the stock began to fall before trading sideways.
How We Can Apply Long Legged Doji Candlesticks Patterns in Our Trading?
As we learned earlier, the long legged doji candlesticks are best used on time frames like the daily chart. There’s more information on these charts that confirm a reversal.
It’s a bit difficult trading this candlestick pattern because of the long lower shadow and upper wicks. It makes risk management a bit challenging because there can be a lot of price action built into one candle.
Sometimes it’s best to wait for a better confirmation candle to take a trade. It’s a good practice to take entries on smaller candlesticks to help manage risk properly.
You can find these in any time frame though. As always it’s important to study! Study and practice looking for patterns and using technical analysis to trade. The more you do it, the easier it’ll be to spot these candlesticks and patterns. Take our free online trading courses.