Rickshaw Man

If we had to come up with one simple drawing, one simple symbol, that would represent investment uncertainty and a potential financial trend reversal, it would be a long vertical line with a short horizontal line through the middle of it. As it turns out, no one is going to ask us to come up with anything like that, because someone else...already has.

The image we just described—the long vertical line with another short line across its middle—is a variation on the long-legged doji, called the “rickshaw man.”

We see these on candlestick charts, and they essentially tell us two things. First, there wasn’t a whole lot of difference between the opening price and closing price of this security. That’s why that horizontal line is so thin. Second, there was a wide range of trading activity during that same period of time, which means investors aren’t really sure how to proceed.

This is why the vertical line has such long tails. Some investors are feeling a little bearish, while others are ready to embrace a little more bullishness. The overall result is a candlestick pattern that reflects this uncertainty. While we can’t say for sure that every rickshaw man is going to lead to a trend reversal, they often do. Not immediately, but like…pretty soon. So if we suddenly see one hanging around our favorite candlestick chart, we might want to consider buying or selling soon.