Do you know how to trade long legged doji candlestick pattern?
I mean so well that once you spot a crypto chart with one, you already know what action to take.
Irrespective of your answer to the question above, read on as I show you how to profit off this strong candle indicator.
Good knowledge of the long-legged doji trading strategy can be very rewarding especially when you merge it with key levels.
These levels are the support and resistance on trendlines, chart patterns, moving averages, etc.
And of course, it may be an indecision candle but this topping tail pattern tells more than it lets on.
So let’s get right into learning how to trade long legged doji candlestick pattern.
What Does a Long Legged Doji Mean?
A long legged doji means a candlestick pattern that has long legs (shadows, wicks, or tails).
The legs are the candle’s high and low prices.
It’s as simple as that!
Study the image below and list out the attributes you can see.
- The opening and closing prices are at the candle’s midpoint.
- The candle’s high has a long upper shadow.
- Also, the candle’s low has a long lower shadow.
If your list contains one or more of these points, then you did great!
Now hold that knowledge because I’m about to get a bit technical.
Doji as an Indecision Candle
A long-legged doji is a Japanese candlestick that represents indecision in the market.
This undecidedness or uncertainty is due to the location of the candle’s open and close.
Note that these two parts are in the same region, which gives the candle a skeletal form.
That means there is no real body (In some cases).
Interestingly, this doji type has a long-shaped upper and lower shadow. And this structure reveals a long trading session or a very volatile one.
It also says the bulls were in charge at some point and so were the bears during this session
How’s that? You may wonder.
Look at it this way:
We don’t really know if the open is above or below the close. But what we do know is that they’re both in the same region or they have the same price.
Also, the long high of the candle says buyers pushed the price all the way to the top of the candle. However, this high was unsustainable.
It’s the same way the long lower wick reveals sellers or bears showed renewed strength. This was during the candle’s trading session but they also failed to maintain these lows.
So, is the long legged doji a bullish or bearish candlestick pattern?
It’s neither of these!
That’s because it’s an indecision candle pattern showing equal buying and selling power in the market.
However, the context in which the long legged doji appears gives you more insight.
The context, in this case, could be the trend, area of value, etc.
I’ll throw more light on these much later.
Long Legged Doji Variants
The ideal long legged doji has its open and close at the center of the candle. It is specifically called a Rickshaw man.
But like most candlestick patterns, this ideal formation also has different variants.
Check this out:
- There’s a variant where the open and close are near the candle’s high.
This gives the candle a longer lower shadow than upper shadow.
- Another variant is where the open and close are near the candle’s low.
This formation yields an upside down cross candlestick.
- Finally, you may come across a high wave candle.
This pattern is a long legged doji with a small real body.
Long Legged Doji Images and Examples
Here are some long legged doji images to give you visual examples of this candlestick pattern.
Example 1 : Long legged Doji at Top
Here’s a Bitcoin/USDT 12-hour time frame chart a long legged doji calling the top.
The top signifies a level where the current trend may start reversing.
What can you make out from the image above?
Let’s analyze the chart together.
- The market is in an uptrend. We know this from the higher highs, higher lows, and higher closes.
- We have several large green candles in succession, hence the market is in an extended uptrend.
- The first red candle (hanging man) is printed and it’s a call for caution if you’re long on this trade. It’s the first clue that the market is topping out.
- The hanging man candle is then followed by a long legged doji. It hints buyers are not as confident as they were before or maybe the sellers are growing confident.
- Finally, we have a confirmation candle to take a short entry.
Example 2: Green Long legged Doji
This image is of a green long-legged doji hinting a bit of bullishness.
This is because the closing price of this candle is higher than the opening price even though not significantly.
Recall that some doji can have a small real body but they still qualify as doji.
If the distance between the open and close is significantly small or negligible, then you can’t really call it a hammer or spinning top.
In the image above, we can deduce the following:
- Price did not tank immediately even after the confirmation candle. And that’s where your stop loss will prove useful. This stop can be placed slightly away from the high of the doji candle.
- The ascent after the red candle was on small green candles (spinning tops) still hinting at the market’s indecision.
- That reluctant rise in price tells you the effect of the doji (and spining tops) will come into play soon. And that is what happened at the bearish engulfing candle.
- Although you may have suffered a bit of loss, the close of the engulfing candle was your cue to go short again. And this time the trade was more rewarding.
Example 3: Red Long legged Doji
Here’s an image of a red long-legged doji signifying a tint of bearishness.
The reason is the same as that of a green doji since we can see price closed lower than it opened.
And like I’d stated already, the tiny real body still qualifies this candle as a doji.
Example 4: Uptrend Long-legged Doji Candlestick
Here’s an image of a long legged doji in an uptrend.
This image reveals the following:
- Upward momentum began to stall after the doji was formed.
- Price didn’t reverse its trend immediately but still made higher closes.
- The slow speed of rise resulted in rounding top formation.
- The first lower close at the top led to lower highs and closes before price finally reversed.
Here’s a section just to test your understanding of long legged doji.
Would you buy (long) or sell (short) upon seeing such a doij in an uptrend? (Refer to the previous image).
Now don’t be too quick to answer, just think about it for a moment.
Let me assist you there buddy.
- It’s an uptrend correct? (Yes!).
- And are the buyers or sellers in control in an uptrend? (The buyers are since price is making higher highs and higher lows).
- But why do we have an indecision candle if the buyers are in control?
If that question made you pause, it should have the same effect when you spot an indecision candle while trading.
It’s the same way a smart student would dish out answers in an exam only to tell you they aren’t sure of question 5.
Wouldn’t that make you go back and assess the question repeatedly and maybe leave it blank for later? ‘
I sure would!
But let’s stop there for now as I show you easy ways to trade the long legged doji pattern.
How to Trade the Long-Legged Doji Pattern
Here’s how to trade the long legged doji pattern as a Bitcoin or crypto trader.
- Study the trend before candle’s formation.
- Check the extent of the move in the trend.
- Review the candle formed before the doji.
- Check the candle formed after the doji.
- Check if there are other dojis in the level or zone.
I’ll break each element down.
1. Study the Trend Before Candle’s Formation:
The first thing you need to do is pay attention to the trend before the long legged doji is formed.
Is it an uptrend, downtrend, or a sideways trend?
An indecision candle such as this formed in an uptrend or downtrend tells you three things.
And these are:
- The uptrend or downtrend could change into a sideways trend.
- The uptrend or downtrend could reverse into the opposite trend.
- Also, the uptrend or downtrend could continue.
One of these may likely happen which is why the next few points will help you determine which.
Note: if the long legged doji appears in a sideways trend, then it won’t really prove useful.
That’s because a sideways trend is already trendless, hence there is no trend to reverse.
I hope that makes sense.
2. Extent of the Move:
It’s important to check if the long legged doji was formed after an extended move.
The same goes if the candlestick appears at a key level such as support or resistance.
If that’s the case, then there’s a high chance it’ll stall or reverse the trend.
3. The Candle Before the Long Legged Doji is Formed:
It’s also important to consider the size and color of the candle that was formed before the doji appeared.
Now if the doji appeared after a tall candle such as a bullish or bearish momentum candle, it hints that the buying or selling trading activity is reducing.
Other points you should note are:
- A doji bar after a tall green candle in an uptrend is called a northern doji. It hints the trend might go sideways, reverse or continue.
- A doji after a tall red candle in a downtrend is called a southern doji. This doji has the same interpretation of a northern doji. However, it’s less powerful than a northern doji.
Applying the above statements to long legged doji that appear after momentum candles, you’re either to exit your position or enter none.
Let’s take an example.
Imagine it’s an uptrend where you have large green candles in succession. Then a long legged doji apears at resistance, you’ll either take profit or stay out of the market.
4. The Candle After the Long Legged Doji is Formed:
Let’s assume you’ve waited patiently for the market to give you clear directions of where it’s headed.
The next step is to look out for the pattern that’ll be created after the long legged doji.
Such a candle would hint if the trend will reverse or continue.
Thus, it’s the confirmation you need to take a position or trade which could be to long or short.
A red candle appeared after a long legged doji in an uptrend.
This means the market has finally made a decision to trade downwards.
How do I know this?
It’s because the bearish candle has a closing price below the doji’s real body.
Keep in mind that you may miss out on good entries if you’re always waiting for confirmation.
The market would’ve already moved several sats to your profit target even before you long or short.
5. Check If There are Other Doji On that Level:
Here’s one more process that’ll prove useful while trading long legged doji pattern.
It’s checking if there are other doji bars on the same level.
And if there are, your doji has lost its significant meaning since other doji are hinting the same thing.
Long Legged Doji Candlestick Analysis
Here’s a section on long legged doji candlestick analysis.
It’s intended to help you fully understand how to trade the long legged doji candlestick pattern.
1. In Uptrend:
Here’s a Bitcoin/USDT 12-hour chart of a long legged doji in an uptrend.
2. After Uptrend:
Here’s another BTC/USDT 12-hour chart of a long legged doji after an uptrend.
It can be called a northern doji when merged with the large green candle.
3. In Downtrend:
An image of a long legged doji in a downtrend.
The Bitcoin/USDT 1-Day chart below also shows a doji acting as support.
The candle helped to stall further downside move given that the trend is bearish.
4. At Resistance
A BTC/USDT 1-Day image of a long legged doji at resistance.
The doji appears after a tall green candle and as such, both candles combine to form a northern doji.
The confirmation to go short came on the bearish engulfing candle. But the short entry would’ve been too late since the red candle traded lower and closed higher.
Despite that, a lower timeframe such as M30 or H1 would’ve been used to spot lower candle closes after the doji.
5. At Support Zone:
A BTC/USDT 12-hour image of a long legged doji at a support zone.
This doji is more or less inverted since its open and close are near the candle’s low.
Interestingly, that is also a high volume candle since price rallied to a high that is above the preceding red candle.
The only problem was when it failed to close above that high as the bears took charge.
Long Legged Doji Vs. Other Doji Candlestick Patterns
Let’s take a moment to compare the long legged doji with other Japanese doji candlestick patterns.
But first, you need to know the different types of doji symbols.
- Four price doji.
- Dragonfly doji.
- Gravestone doji.
- Long legged doji.
- Standard doji.
These doji candlestick pattern types all indicate the same thing. And that is the indecisive state of the market.
Despite that, they have their own unique meaning depending on the location of the open and close. This location also provides rules to guide your trade.
Great importance is given to the positioning of both prices on the candle in relation to the high and low.
Now here’s how other doji styles differ from the long legged doji:
1. Four Price Vs. Long Legged Doji:
Four price doji is probably the most ideal form of an indecisive candle.
All parts of the candle’s price are in the same location.
That is, the open, close, high, and low have the same price (or are very close). There are no upper and lower wicks.
Now that’s really confusing since you neither know who’s winning nor losing.
The market at this point is said to be in a state of equilibrium.
Whereas in a long legged doji you’ll know the buyers and sellers made great effort to push prices in their favor.
But this candle shows either both market participants are uninterested or have completely left the market.
2. Dragonfly Doji Vs. Long Legged Doji:
A dragonfly doji has its open and close at the high of the candle.
This formation differs from a long legged doji where the open and close are within the candle’s midpoint.
As such, a dragonfly doji has some degree of bullishness to it.
That’s because price closed near the candle’s high even though it traded around its lows at some point.
The ability of bulls to push price off this low gives the candle a bullish implication.
But let’s not forget this pattern is still similar to the long legged doji. It’s also indecisive because the open and close are near each other.
3. Gravestone Vs. Long Legged Doji
Now that you know the similarities and differences between the dragonfly and gravestone doji, apply it to the gravestone doji.
This doji type has its open and close at the lows of the candle.
Is that a bullish or bearish formation?
You got it right if your answer is bearish.
The long upper wick tells us price traded near the candle’s highs at one point.
That was really impressive since this same candle opened near its lows.
However, the rally was short-lived since price closed at just about the same level it opened. And that gives it a degree of bearish implication.
So if you’re wondering who won the battle between bulls and bears, it’s the bears.
That’s quite intriguing given a doji traditional narrative of being an indecisive candle.
4. Standard Doji Vs. Long Legged Doji:
The standard or common doji bears a close resemblance to the long legged doji.
But there’s still a clear difference!
Can you point it out?
The distance between the high and low is the same. The open and close are also in the mid section of the candle.
Now take a moment to envision this candle and what could have led to its formation.
I’ll still break it down:
- Price opened and either rallied to the high or declined to the low. Both of these happened but we’re not really sure which occurred first.
- The rally to the northern and southern poles of the candle was not a prolonged one. Hence, the short wicks.
- Price finally closed right where it opened hinting at equal power between buyers and sellers.
So, what’s the difference between a standard doji and a long legged one?
It’s the height of the high and low. This height is minimal on a standard doji but lengthy on a long legged doji.
That means the momentum or volatility before the long legged doji was formed is higher than that of the regular doji.
Frequently Asked Questions
Here are answers to some frequently asked questions on doji.
1. How Many Types of Dojis are There?
There are five main types of doji.
These are the four price, dragonfly, gravestone, long legged, and standard doji.
You may find different variants of each of these.
Nonetheless, a good understanding of how each is formed helps you trade profitably.
2. Can a Doji Have a Body?
Yes, a doji can have a real body.
Such a body would often be very small. And even smaller than what you’ll find on a hammer or spinning top.
A small body still hints the market is indecisive but gives off a bit of bullish or bearish vibe.
4. Does it Matter if a Doji is Red or Green?
This doji already has a very tiny body which means it’s an indecison candle.
It’s worth pointing out that a red doji reveals price closed lower than it opened, even though not significantly.
What you choose to do with that information is up to you.
In my case, I’ll check if the doji’s closing price is below that of a previous candle in an uptrend.
It’ll mean the market is making lower closes.
The reverse would be the case for a green doji in an uptrend.
3. Is Doji Reversal Pattern?
Yes, a doji is a strong reversal pattern.
Reversal means the current trend is about to change.
It could change from:
- Uptrend – sideways trend – then into a downtrend.
- Or it could move from uptrend – sideways – uptrend.
- We could also have downtrend – sideways – uptrend.
- Or dowtrend – sideways – downtrend.
Therefore, a doji in an uptrend cautions you to take profit or avoid adding to positions.
And a doji in a downtrend says not to short or add to existing positions.
4. What Happens After a Doji Candle?
The trend could continue, go sideways or change after a doji candle is formed.
You can easily determine which is about to happen by navigating to timeframes lower than the one where the doji is.
These lower timeframes may show bullish or bearish chart patterns.
Another way to do it is to navigate to a higher timeframe and determine if the doji is at a key level.
This key level could be support or resistance.
5. Is Hanging Man Always Bearish?
A hanging man candle looks bullish since price bounced off its lows to close near the candle’s highs.
That is why it may not always have a bearish outcome since top buyers are not in pain.
What gives this candle a more bearish outlook is when the candle after it closes below it.
So, have you learned anything new from this guide on how to trade long legged doji candlestick pattern?
Let me know in the comment section!
Now the long legged doji is quite an interesting candlestick pattern that many traders ignore.
But you shouldn’t! And you know why that is already.
It may be indecisive but it hints of an impending trend change or continuation.
And whenever a very confident-looking trend becomes indecisive, you need to hold your money and not take chances.
Try out the steps outlined in this guide with live trades to get better understanding of dojis in general.