What Is the Long-Legged Doji?
Let me explain the long-legged doji to you directly: it's a candlestick pattern with long upper and lower shadows, and the opening and closing prices are almost the same, creating a small real body.
Key Takeaways
You should know that the long-legged doji has those long shadows and nearly identical open and close. It signals indecision and carries more weight after a sharp rise or fall. While some traders act on it alone, I recommend watching what happens next. Remember, it's not always a trend ender—it might just start a consolidation or be a minor hiccup in the ongoing trend.
Understanding the Long-Legged Doji
A long-legged doji tells you there's indecision on where the security's price is headed next. It could kick off a consolidation phase, where more such dojis appear before the price tightens up or breaks out into a new trend.
These candles matter most in strong uptrends or downtrends. They indicate supply and demand are balancing out, which might lead to a reversal. When the price isn't pushing as hard in one direction, sentiment could be shifting.
Take an uptrend: prices close higher than they open most times, with buyers in charge. Then a long-legged doji shows buyers and sellers fought hard but ended even, unlike before.
You can spot this pattern on any timeframe, but it's stronger on longer charts with more traders involved. It's one of the doji types, alongside standard, dragonfly, and gravestone dojis.
Long-Legged Doji Trading Considerations
You have options for trading a long-legged doji, but you don't have to trade it at all. It's just one candle, and since the close is near the open, some see it as too insignificant for decisions.
I suggest waiting for confirmation through subsequent price action. Long-legged dojis can cluster or form part of a bigger consolidation, leading to either a reversal or continuation based on the breakout direction.
If you're trading it, consider entering long if price goes above the doji's high, or short if below the low. Or wait for a consolidation around it and enter on a breakout above or below that.
For risk management, place a stop loss below the pattern or consolidation on longs, or above on shorts.
The pattern works better near key support or resistance. Say in an uptrend, if it forms near resistance, a drop below the doji low raises reversal odds.
No built-in profit targets here, so use indicators, moving average crosses, or a fixed risk-reward like exiting at double or triple your risk.
If this interests you, look into technical analysis courses for more depth.
Long-Legged Doji Example
Look at this chart of Tesla Inc. for some examples—they show the pattern isn't always a standalone signal; context matters.
On the left, price is dropping and forms a long-legged doji, leading to consolidation then a brief upmove that fails, and price falls again.
As it keeps falling, another doji appears, starting another consolidation. Price breaks up and trends higher. The doji didn't trigger the reversal but highlighted the indecision before it.
On the right, after a fall and consolidation, a long-legged doji forms, dips below the low but rallies back in. Price then breaks higher. This one had a bit larger body.
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