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Doji, The Long-Legged Candlestick
Understanding the Long-Legged Doji Candlestick Pattern: A Comprehensive Guide
The Doji Long-Legged candlestick is a unique pattern in technical analysis, characterized by its long upper and lower shadows with a small body. This pattern indicates a high level of market indecision, where neither buyers nor sellers are in control. The Doji Long-Legged candlestick often appears at points of potential reversal, signaling that the current trend may be losing momentum. Recognizing this pattern can help traders anticipate possible changes in market direction and make more informed trading decisions.
In this tutorial, we'll explore how the Long-Legged Doji candlestick pattern can help traders assess market gains. We'll also discuss a trading strategy that effectively incorporates the Long-Legged Doji pattern to maximize trading opportunities.
Name: | Doji, Long-Legged |
---|---|
Forecast: | Lack of Determination |
Trend prior to the pattern: | N/A |
Opposite pattern: | None |
Accuracy rate: | 50% |
A Quick Overview of Doji, Long-Legged Pattern
Any normal doji candlestick with a tiny body and big shadows on the top and lower sides becomes the long-legged doji candlestick. Because the body is so tiny, the opening and closing prices are either identical or within a very narrow range. According to Bulkowski, this pattern forecasts reversal with an 57% accuracy rate.
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Get StartedA long-legged doji candlestick, which belongs to the Doji family, is created when the opening and closing prices are almost equal. As a result, the candlestick has a tiny body and long shadows on both sides, up and down. When there is a market equilibrium between buyers and sellers, the long-legged doji appears.
In terms of pattern psychology, the long-legged doji indicates a battle between bulls and bears, with neither side coming out on top. The bulls are joyful at points of the day because price is rising to the sky, while the bears are in complete control at other times as they force price down near the earth's core. By the end of the day, however, the price has returned to its original level, leaving behind long shadows and sweaty brows.
The Long-Legged Doji chart pattern is generated when the open and closing prices are almost identical, and both the upper and lower shadows of the doji are taller than the usual shadow length. The lengthy upper and lower shadows are the most crucial component of the Long-Legged Doji.
Consider the following factors to determine whether the candlestick is a 'Long-Legged Doji.'
- Because it's a doji candle, the opening and closing prices are same or almost identical.
- The upper and lower shadows are both quite lengthy.
- The body of the candle is in the middle or around the centre.
When long-legged doji candles appear during a strong uptrend or decline, they are considered the most noteworthy. The long-legged doji indicates that supply and demand factors are approaching balance and that a trend reversal is possible. This is due to the fact that equilibrium or hesitation indicates that the price is no longer moving in the same direction. It's possible that public opinion is shifting.
During an uptrend, for example, the price is driven higher, and most periods' closes are higher than the open. The long-legged doji indicates that there was a war between buyers and sellers, but that they eventually came out on equal footing. This is in contrast to previous eras when the buyers held the reins.
What is Doji
On a candlestick chart, doji candles come in a variety of shapes and sizes. Each doji gives the trader with varied information depending on where it appears.
Read MoreBefore acting, some traders will want to see further confirmation—price swings that follow the long-legged doji. This is due to the fact that long-legged dojis might appear in groups or as part of a bigger consolidation. Depending on which manner the price breaks out of the consolidation, it may result in reversals or continuations of the previous trend.
- In a bull market, candles that close in the middle portion of the candle perform better.
- In a bear market, Candles with closures in the bottom third of the candle operate best.
- The green-bodied doji shows a slight tendency to act as a continuation pattern.
Sardar Omar
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Disclaimer:This material is provided purely for educational purpose and is not intended to provide financial advice.