The long-legged doji is one of the most recognizable of all the Japanese candlestick patterns that traders look for, and can be a powerful sign of market indecision and potential reversals. The pattern consists of a candlestick with an open and close price that is virtually at the same price with a long extended upper and lower shadow. This pattern can be bearish or bullish, but is most significant when it occurs after a strong upward or downward price move.

One of the most important aspects of the long-legged doji pattern is the volume. Generally, when a long-legged doji occurs after a significant trend move, it should be accompanied by an increase in volume. This is a sign that the market is showing uncertainty and a great number of traders are placing buy and sell orders, but neither side is strong enough to move the price significantly. If volume is low or declines on a long-legged doji, this is a sign that the pattern is less significant or may not be indicative of a reversal at all.

When a long-legged doji appears, some traders will act on the single pattern. Others, however, may choose to wait and see if the market moves in either direction before executing a trade. As with all candlestick patterns, the long-legged doji has to be confirmed by the next few candles. If the market opens the next day below the long-legged doji, this tends to be a bearish indication, and if the market opens above the long-legged doji, it can be seen as a bullish indication.

Overall, the long-legged doji is seen as an effective trading tool when used with other indicators and tools. It is used to identify indecision in the market and potential reversals. Traders should take into account volume on the doji, as well as what happens on the next few candles before taking action. The pattern is not always significant, and is not a surefire sign of a trend reversal, but can be a powerful tool for traders who know how to effectively employ it.