Long-legged doji in technical analysis is a candlestick pattern in which opening and closing prices differ slightly (almost the same), but both shadows are long. Long-legged doji indicates indecision about the future direction of the security.
Long-legged doji is important during substantial uptrends or downtrends. Such a pattern informs about equilibrium between supply and demand, which can end with change of trend. The long-legged doji is also associated with change of sentiment of investors. The pattern can be used to set stop-loss or to signal support level.
It is important to analyze not only long-legged doji, but also find other patterns of technical analysis. Making decisions based on only one pattern is very risky and often can end with loses.
See also: Gravestone doji.
- Edwards, R. D., Magee, J., & Bassetti, W. C. (2007). Technical analysis of stock trends. CRC press.
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