- Sentiment: Neutral
- No. of candles: 1
- Direction: Neutral
What Is The Long-Legged Doji Pattern?
The Long Legged Doji pattern is a neutral Japanese candlestick pattern that consists of a single candle.
A Long-Legged Doji candle has a small real body, indicating that the opening and closing prices are close to each other, with very long upper and lower wicks, indicating a high level of market indecision and volatility.
What Is The Psychology Behind The Long-Legged Doji Pattern?
The Long-Legged Doji pattern reflects a period of high market indecision and volatility, with neither the buyers nor the sellers able to gain control.
The long upper and lower wicks on the candle indicate that the price traded significantly higher and lower during the period but ultimately closed near the opening price.
This suggests that the market is in a state of equilibrium, with no clear direction for the price to move.
How To Trade The Long-Legged Doji Pattern?
Trading the pattern can be challenging since it is neutral in sentiment, and it is difficult to predict which way the price will move next.
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.
However, it is essential to be aware of the overall market context and to consider factors such as support and resistance levels, as well as the strength of the prevailing trend.
The pattern can provide valuable information about market indecision and volatility, but it is crucial to use it in conjunction with other technical indicators and chart patterns to confirm the trend change or continuation.
Keep in mind that a single Long-Legged Doji candle does not necessarily indicate a significant change in market sentiment, and it is always necessary to use proper risk management techniques to protect against potential losses.