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Definition: Long Legged Doji is characterized by very long shadows. It is an important reversal signal. Recognition Criteria: 1. The real body of the Long Legged Doji is either a horizontal line
or it is significantly small (its length is not more than a few ticks). Long Legged Doji shows that there is a great amount of indecision in the market. This pattern is formed when prices trade well above and below the day's opening price, but then close almost at the same level as the opening price. It means that the end result is not different from the initial open despite the whole excitement and high volatility during the day. This implies a loss of sense of direction and that there is a great amount of indecision in the market. Important Factors: Long Legged Doji is especially important at tops. Long Legged Doji is a single candlestick pattern. Hence, a confirmation is definitely required in the form of an opposite move to the prior trade on the next trading day in order to judge that a reversal may be starting. |