Rickshaw Man Candlestick Pattern: Long Legged Doji

The greatest tool technical analysts use to predict the direction of stock price movements is candlestick chart patterns. These charts consist of numerous patterns formed using a cluster or series of candles, each suggesting a different price direction.

However, a few candles alone cannot predict the price direction. Some candles communicate a clear direction whereas others need confirmation or supporting candles to infer the price movement. One such candlestick pattern that indicates indecision is a rickshaw man candlestick chart pattern. This article details what a rickshaw man candlestick pattern is.

Rickshaw Man Candlestick Pattern

A candlestick pattern indicates four important price points of a stock: high, low, open, and close prices. The high and low prices of the security are represented by the lines called shadows or wicks whereas the opening and closing price range is indicated by the “real body”.

A candlestick pattern that has almost the same opening and closing prices and creates long shadows on the candlestick with higher highs and lower lows is known as the rickshaw man candlestick pattern. It is similar to a long-legged Doji where the “real body” can be located at or very near the middle of the candle.

Typically, the rickshaw man candlestick pattern indicates indecision in the marketplace. Hence, it should be combined with other technical indicators, price action analysis, or chart patterns to conclude the direction of a trend change or continuation.

The rickshaw man candles are formed when the market control of the security lies in the hands of both bulls and bears but at different instances during the same period. This control disparity is the reason behind a long shadow formation on the candle.

A rickshaw man candlestick pattern is quite similar to a long-legged Doji that has a closing and opening price almost in the middle of the candle shadows. The high and low prices are reasonably apart, making long shadows. A Doji is created when the range between opening and closing is minimal.

The rickshaw man pattern is formed when the bulls and bears are in equilibrium control of the market at different times but during the same period.

How to identify a Rickshaw Man candlestick pattern?

It is tedious to locate a rickshaw man pattern as the price trend leading to the pattern formation is not mandatory. A few things to look at while identifying a rickshaw man candlestick pattern are:

• A single candle line with a small Doji-like body with long shadows on either side of the real body
• A real body around the mid point of the candlestick
• A small real body, i.e., the opening and closing price range is too small

Advantages of Rickshaw Man candlestick pattern

Although the rickshaw man candlestick signals indecision in the market, it could indicate concrete decisions when combined with some contexts.

In some cases, a consolidation period occurs which suggests a pattern continuation. In other cases, the pattern could prove to be indecisive at the end of a bullish runup, which means a pattern reversal.

Like all Doji patterns, the rickshaw man candlestick pattern suggests the supply and demand in the market. Rickshaw man candlestick chart when combined with other technical indicators, provides a more reliable indication to trade. For example, you can combine the rickshaw man candlestick pattern with a stochastic pattern in an overall market uptrend that has seen a recent pullback. If this is making a bullish crossover, it could indicate the proximity of the bottom to the pullback. The signal is confirmed when the price starts to move upwards.

Drawbacks of Rickshaw Man Candlestick pattern

The purpose of technical charts and patterns is to communicate a clear price direction. A rickshaw man candlestick indicates nothing but indecision. A trade executed based solely on the rickshaw man pattern may not prove to be insignificant as there are no profit targets inherently. The profit-booking decision remains with the trader if any.

It is important to take other technical indicators into account while working with rickshaw man candlestick charts as the pattern frequency increases with already distorted price actions.