CDL_LONGLINE (Long Line Candle)

Overview

The Long Line Candle is a single-candle strength candlestick pattern. This pattern identifies candles with unusually long bodies relative to recent price action, indicating strong directional momentum and conviction. This pattern is recognized by TA-Lib and provides potential trading signals when specific price action criteria are met.

Parameters

Parameter	Type	Default	Description
open	Array	Required	Array of opening prices for each period
high	Array	Required	Array of high prices for each period
low	Array	Required	Array of low prices for each period
close	Array	Required	Array of closing prices for each period

Parameter Details

Note: Array elements should be ordered from oldest to newest (chronological order)

open - Array of opening prices for the analyzed time series - Must have the same length as high, low, and close arrays - Used to determine candle body size and direction

high - Array of high prices for each period - Used to identify upper shadows and price ranges - Critical for pattern recognition

low - Array of low prices for each period - Used to identify lower shadows and price ranges - Essential for pattern validation

close - Array of closing prices for each period - Determines candle color (white/black) and body size - Key element in pattern recognition

Usage

Basic Usage

require 'sqa/tai'

# Example price data
open =  [48.00, 48.20, 48.50, 48.40, 48.30]
high =  [48.70, 48.72, 48.90, 48.87, 48.82]
low =   [47.79, 48.14, 48.39, 48.37, 48.24]
close = [48.20, 48.61, 48.75, 48.63, 48.74]

pattern = SQA::TAI.cdl_longline(open, high, low, close)

puts "Pattern signal: #{pattern.last}"

Analyzing Pattern Signals

# Monitor for pattern signals
pattern.each_with_index do |signal, idx|
  next if signal == 0

  if signal > 0
    puts "Bullish signal at index #{idx}"
  elsif signal < 0
    puts "Bearish signal at index #{idx}"
  end
end

Combining with Trend Indicators

# Use with confirmation indicators
require 'sqa/tai'

pattern = SQA::TAI.cdl_longline(open, high, low, close)
sma_50 = SQA::TAI.sma(close, 50)
rsi = SQA::TAI.rsi(close, 14)

current_signal = pattern.last
current_price = close.last

if current_signal != 0
  trend_aligned = (current_signal > 0 && current_price > sma_50.last) ||
                  (current_signal < 0 && current_price < sma_50.last)

  if trend_aligned
    puts "Pattern confirmed by trend - #{current_signal > 0 ? 'BULLISH' : 'BEARISH'}"
  end
end

Understanding the Indicator

What It Measures

The Long Line Candle pattern measures specific price action characteristics that suggest potential market direction. Candlestick patterns capture market psychology through the interaction of opening, high, low, and closing prices within and across multiple periods.

Key aspects: - Market sentiment through candle body size and position - Battle between bulls and bears through shadow formation - Momentum and trend continuation or reversal potential - Entry and exit timing through pattern completion

Pattern Characteristics

• Range: Returns +100 (bullish) or -100 (bearish), or 0 (no pattern)
• Type: single-candle candlestick pattern
• Signal: Strength indication
• Best Used: Context-dependent; works best in specific market conditions
• Reliability: Should be confirmed with other technical indicators

Interpretation

Signal Values

• +100 (bullish) or -100 (bearish): Pattern detected - indicates potential strength signal
• 0: No pattern present at this position

Pattern Recognition

The pattern is identified by TA-Lib's recognition algorithms which analyze: - Relative candle body sizes - Shadow lengths and proportions - Price gaps between candles - Sequential candle colors and relationships - Overall market context

Trading Signals

Entry Signals

When the pattern appears:

if pattern.last != 0
  entry_price = close.last

  if pattern.last > 0
    # Bullish signal
    stop_loss = low[-3..-1].min * 0.98
    target = entry_price + 2 * (entry_price - stop_loss)
    puts "BUY Signal at $#{entry_price.round(2)}"
  else
    # Bearish signal
    stop_loss = high[-3..-1].max * 1.02
    target = entry_price - 2 * (stop_loss - entry_price)
    puts "SELL Signal at $#{entry_price.round(2)}"
  end

  puts "Stop Loss: $#{stop_loss.round(2)}"
  puts "Target: $#{target.round(2)}"
end

Risk Management

# Calculate position size based on risk
def calculate_position_size(capital, risk_percent, entry, stop)
  risk_amount = capital * (risk_percent / 100.0)
  risk_per_share = (entry - stop).abs
  shares = (risk_amount / risk_per_share).floor
  return shares
end

# Example
if pattern.last != 0
  capital = 10000
  risk_percent = 2
  shares = calculate_position_size(capital, risk_percent, close.last, stop_loss)
  puts "Position size: #{shares} shares"
end

Best Practices

Optimal Use Cases

This pattern works best when: - Used in conjunction with trend indicators - Combined with volume analysis - Confirmed by support/resistance levels - Applied on appropriate timeframes (daily, 4-hour) - Part of a comprehensive trading strategy

Combining with Other Indicators

With Trend Indicators: - Moving Averages: Confirm overall trend direction - ADX: Verify trend strength - MACD: Validate momentum

With Volume Indicators: - Volume: Confirm pattern with volume spikes - OBV: Check for volume trend alignment - VWAP: Validate price levels

With Support/Resistance: - Key Levels: Pattern more significant at support/resistance - Fibonacci: Pattern at Fib levels adds conviction - Pivot Points: Confluence with pivots strengthens signal

Common Pitfalls

1. Using in Isolation: Always combine with other indicators
2. Ignoring Context: Market conditions matter significantly
3. Over-Trading: Not every pattern results in profitable trade
4. Poor Risk Management: Always use stops and position sizing
5. Missing Confirmation: Wait for pattern completion and confirmation

Risk Management Guidelines

Stop Loss Placement: - Place stops beyond pattern extremes - Add buffer for volatility (1-2%) - Use ATR for dynamic stop placement - Consider time-based stops

Position Sizing: - Risk no more than 1-2% per trade - Scale positions based on conviction - Consider market volatility - Adjust for pattern reliability

Practical Example

Complete trading scenario:

require 'sqa/tai'

# Historical price data
open =  [45.00, 46.00, 47.50, 49.00, 48.50]
high =  [46.20, 47.80, 49.30, 50.00, 49.00]
low =   [44.80, 45.90, 47.30, 48.70, 48.00]
close = [46.00, 47.50, 49.00, 48.80, 48.50]

# Calculate pattern and indicators
pattern = SQA::TAI.cdl_longline(open, high, low, close)
sma_20 = SQA::TAI.sma(close, 5)
rsi = SQA::TAI.rsi(close, 5)

# Analysis
current_signal = pattern.last
current_price = close.last

if current_signal != 0
  puts "=" * 50
  puts "Long Line Candle PATTERN DETECTED"
  puts "=" * 50
  puts "Signal: #{current_signal}"
  puts "Current Price: $#{current_price}"
  puts "SMA: $#{sma_20.last.round(2)}"
  puts "RSI: #{rsi.last.round(2)}"
  puts ""

  # Trading decision
  if current_signal > 0 && current_price > sma_20.last
    puts "BULLISH SETUP - Consider long position"
  elsif current_signal < 0 && current_price < sma_20.last
    puts "BEARISH SETUP - Consider short position"
  else
    puts "Pattern detected but not confirmed by trend"
  end
end

Related Indicators

Similar Patterns

• Other candlestick patterns with similar characteristics
• Patterns that work well in conjunction
• Alternative patterns for same market conditions

Complementary Indicators

• ADX: Trend strength confirmation
• RSI: Momentum validation
• Moving Averages: Trend direction
• Volume Indicators: Volume confirmation

Advanced Topics

Multi-Timeframe Analysis

For stronger confirmation: 1. Identify pattern on primary timeframe 2. Confirm trend on higher timeframe 3. Use lower timeframe for entry timing 4. Ensure alignment across timeframes

Pattern Reliability

Factors affecting pattern reliability: - Market conditions (trending vs ranging) - Volatility levels - Volume characteristics - Position within larger trend - Confluence with other signals

Statistical Considerations

Research suggests candlestick patterns work best when: - Combined with other technical analysis tools - Applied in appropriate market contexts - Used with proper risk management - Confirmed by volume and momentum

References

• "Japanese Candlestick Charting Techniques" by Steve Nison
• "Encyclopedia of Candlestick Charts" by Thomas Bulkowski
• "Technical Analysis of the Financial Markets" by John J. Murphy
• "Beyond Candlesticks" by Steve Nison

See Also

• Pattern Recognition Overview
• Candlestick Pattern Guide
• Technical Analysis Basics
• Back to Indicators