As of 09/18/2020   Indus: 27,657 -244.56 -0.9%     Trans: 11,432 -120.44 -1.0%     Utils: 798 -12.86 -1.6%     Nasdaq: 10,793 -117.00 -1.1%     S&P 500: 3,319 -37.54 -1.1%	YTD -3.1%    +4.9%   -9.2%    +20.3%    +2.7%	Targets    Overview: 09/14/2020     29,400 or 26,700 by 10/01/2020   11,750 or 10,600 by 10/01/2020   845 or 775 by 10/01/2020   11,800 or 10,400 by 10/01/2020   3,600 or 3,200 by 10/01/2020
CPI (updated daily): on 8/18/20

As of 09/18/2020   Indus: 27,657 -244.56 -0.9%     Trans: 11,432 -120.44 -1.0%     Utils: 798 -12.86 -1.6%     Nasdaq: 10,793 -117.00 -1.1%     S&P 500: 3,319 -37.54 -1.1%	YTD -3.1%    +4.9%   -9.2%    +20.3%    +2.7%
Targets    Overview: 09/14/2020     29,400 or 26,700 by 10/01/2020   11,750 or 10,600 by 10/01/2020   845 or 775 by 10/01/2020   11,800 or 10,400 by 10/01/2020   3,600 or 3,200 by 10/01/2020
CPI (updated daily): on 8/18/20

Bulkowski on the Long Legged Doji Candle Pattern

In my book, Encyclopedia of Candlestick Charts, pictured on the right, I explore the entire range of candlestick patterns from abandoned babies to windows (not exactly A to Z, but you get the idea), in both bull and bear markets, using almost 5 million candle lines in the tests.

The book takes an in-depth look at 103 candlestick patterns and reports on behavior and rank (3 types: reversal rate, frequency, and overall performance), identification guidelines, performance statistics (tables of general statistics, height, and volume), trading tactics (tables of statistics on reversal rates and performance indicators), and wraps each chapter with a sample trade. I share a sliver of that information below. If you like what you read here, then you will love the book. Help support this website and buy a copy by clicking on the above link.

The long legged doji is like other doji candlesticks. It means nothing. Tests confirm that the breakout direction is random. In theory, the long legged doji acts as indecision among traders as to the direction price will take. In a doji, the opening and closing prices end where they started after both rising and dropping during the session. The tug-of-war between the bulls and the bears results in a stalemate at the closing bell. What will happen tomorrow is anyone's guess.

Long Legged Doji Candlestick: Important Results

Theoretical performance: Indecision Tested performance: Bullish continuation 51% of the time Frequency rank: 41 Overall performance rank: 37 Best percentage meeting price target: 68% (bull market, up breakout) Best average move in 10 days: 4.62% (bear market, up breakout) Best 10-day performance rank: 38 (bear market, up breakout) All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts. The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

Long Legged Doji

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Long Legged Doji Candlestick: Discussion

My tests show that the long legged doji acts as a bullish continuation candlestick 51% of the time, which I consider random. Thus, the indecision label is an apt one. The breakout direction is not known, and trying to depend on this candle hinting at a direction is fraught with error.

The overall performance rank is 37, which is closer to 1 (best performance) than 103 (worst). The best average move 10 days after the breakout is a rise of 4.62% in a bear market. That climb gives the long legged doji its best rank of 38 (bear market, up breakout). The 38 rank is a different measure than the overall performance rank of 37, which combines the results of 1, 3, 5 and 10 days for all market directions.

Long Legged Doji Candlestick: Identification Guidelines

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Long Legged Doji Candlestick: Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

1. Long legged doji candles that appear within a third of the yearly low perform best -- page 242.
2. Long legged doji candles with shadows taller than the median show price that moves 50% farther than do those with shorter shadows -- page 243.
3. Breakouts below the 50-trading day moving average outperform -- pages 244-245.

Long Legged Doji Candlestick: Example

The chart shows three long legged doji candlesticks on the daily scale. Candle A appears in the middle of a sideways price trend. In fact, all three, A, B, and C are positioned in the same congestion area. Price has no direction after the doji appears, just as my tests indicate.

Notice the long upper and lower shadows on the long legged doji, giving the candlestick its name. The length of the shadows need not appear the same, only that they are longer than recent shadows on other candles.

-- Thomas Bulkowski

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Long Legged Doji Candlestick: Other Examples

• Long legged doji in GLD.

 

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