Long-Legged Doji
Categories: Charts
A “long-legged doji” might sound like a creature we’d come across in a rainforest on the Malay Peninsula, but it’s actually the name for a specific set of trading circumstances for a specific security on a specific day.
More specifically, it’s a type of trend we see on candlestick charts that basically tells us two things. First, on this day, the opening and closing prices of this security were almost identical. Second, the day’s high and low trade prices (called shadows) are about equidistant from the candle’s body.
Long-legged dojis look like plus signs. The bar actually looks more like a horizontal line than a bar, which is what happens when the opening and closing prices are identical, or nearly so. And it’s in the middle of the price line. According to the experts, this can mean that, on that particular day, there was a lot of indecision about this security.
So what does that mean? It means we might be about to see a price trend reversal…or we might not. Because one day does not a trend make.