Long-Legged Doji Candlestick Pattern Explained

The upper and lower shadows or tails, also known as wicks, show the high and low of the day. Long legged doji candlesticks are an important tool that can convey important information regarding the psychology of investors present in the market. However, in the world of trading, no single indicator is enough to trade. Long-legged doji candles are deemed to be most significant when they occur during a strong uptrend or downtrend.

Both are required to create the long-legged doji or the near-doji formation called a spinning top. In the chart above, a long-legged candlestick occurred, at the bottom, showing a period of indecision between buyers and sellers. This candlestick has long upper and lower shadows with the Doji in the middle of the candle’s trading range, clearly reflecting the indecision of traders. We saw an example of this strategy’s effectiveness on the Euro (EURUSD) daily chart on March 9th, 2011. The price plummets the next day, providing windfall profits to savvy forex traders.

Long Legged Doji Candlestick Examples

By signing up as a member you acknowledge that we are not providing financial advice and that you are making the decision on the trades you place in the markets. We have no knowledge of the level of money you are trading with or the level of risk you are taking with each trade. Some traders will want to see more confirmation—the price movements that occur after the long-legged doji—before acting. This is because long-legged dojis can sometimes occur in clusters, or as part of a larger consolidation.

Also, we provide you with free options courses that teach you how to implement our trades as well. Some traders use the high and low of the candle wicks as potential buy or sell triggers, placing a stop loss order above or below the high or low, respectively. Likewise, a consolidation can come into play, after which price might continue moving toward the underlying trend. The long-legged dojis are most important when they occur after strong trends either on the upside or downside. Therefore, the resultant candlestick has long wicks on both sides, up and down, and a small body. To identify the pattern, you just need to look at the charts and note whether a pattern such as the one we have noted above has formed.

What Is a Long-Legged Doji Candlestick Pattern?

We put all of the tools available to traders to the test and give you first-hand experience in stock trading you won’t find elsewhere. Feel free to ask questions of other https://forexhero.info/numerical-differentiation-methods-in-python/amp/ members of our trading community. We realize that everyone was once a new trader and needs help along the way on their trading journey and that’s what we’re here for.

Get ready to receive three amazing chart pattern videos that are over 30 minutes long straight into your inbox. Below are a few frequently asked questions related to the long-legged Doji chart pattern. The value of shares and ETFs bought through a share dealing account can fall as well as rise, which could mean getting back less than you originally put in. Doji is considered as most popular reversal candle and it is easy to identify as you can see in the above figure. There’s a good chance that it could break out and you want to be trading the breakout of the highs.

Free Trading Courses

In a doji, the opening and closing prices end where they started after both rising and dropping during the session. The tug-of-war between the bulls and the bears
results in a stalemate at the closing bell. As we have seen throughout this article, long legged doji candlesticks are a tool that can make trading the forex markets much easier. While trading, it is important to be extremely cautious on the emergence of long-legged doji candlestick near support and resistance levels.

• One thing to share first is don’t make this mistake when you’re trading the Doji candlestick pattern.
• The pattern is only one candle, which some traders believe is insufficient to make a trade decision, particularly given the price did not move significantly on a closure level.
• It happens because a balance or a disqualification means that the price is not pushing in the direction it was before.
• You can go short on the next candle, stop loss above the swing high and depending on whether you want to take a swing or not.
• A long-legged doji suggests uncertainty regarding the price of the underlying security’s upcoming trend.

We’ll use the Ethereum (ETHUSD) October 17th, 2021, daily chart to make this lucid. We have also assessed the overall strategy you need to use when trading using the pattern.

Candlestick Trading Tutorials:

It’s important to treat day trading stocks, options, futures, and swing trading like you would with getting a professional degree, a new trade, or starting any new career. 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.