The Long-Legged Doji is a technical analysis pattern that is used in the stock market. It’s named after the Japanese word for candlestick because it looks like a candlestick with long legs. The candlestick known as the long-legged doji has a small real body. Due to its lengthy upper and lower shadows and about equal opening and closing prices.
The candlestick indicates uncertainty about the direction the price of the underlying investment will take in the future. A consolidation period may begin with the formation of one or more of this candlestick, after which the price either breaks out to develop a new trend or moves into a tighter pattern.
For instance, in an uptrend, the price is being driven higher and most periods’ close is above the opening. The long-legged doji depicts a conflict between buyers and sellers that ultimately resulted in a roughly equal outcome.
How to Recognize the Long-Legged Doji
To recognize the candlestick you have to note the following ;
A candlestick with extended upper and lower shadows. It has an almost equal opening and closing prices is known as a long-legged doji.
The pattern, which is most notable when it follows a major rise or dip, exhibits indecision.
Some traders want to wait and see what happens with the market following this candlestick, while others may act based on the one-candle pattern.
The pattern may signal the beginning of a consolidation phase or simply be a little blip in the present trend; it is not always noteworthy or indicative of the conclusion of a trend.
