Gravestone Doji

The Gravestone Doji is a type of Doji candlestick pattern that can signal a potential bearish reversal.

The bullish version of the Gravestone Doji pattern is the Dragonfly Doji pattern.

Here's a breakdown of the Gravestone Doji pattern:

  1. The pattern consists of a single candlestick with a long upper shadow and no lower shadow. The opening, closing, and lowest prices of the time period are all the same or very close to each other, resulting in an upside-down T-shaped candlestick.

  2. The long upper shadow suggests that buyers pushed the price significantly higher during the time period, but sellers were able to drive the price back down to the opening price, indicating a rejection of the higher prices.

  3. The Gravestone Doji pattern can appear during an uptrend or a period of consolidation. When it appears during an uptrend, it can signal a potential bearish reversal, as the rejection of the higher prices suggests that selling pressure is starting to increase.

  4. Confirmation of the pattern's bearish signal comes if the next candlestick after the Gravestone Doji is bearish and closes below the Gravestone Doji's close. This would suggest that the sellers have taken control and that the uptrend may be about to reverse.

As with all candlestick patterns, the Gravestone Doji should be used in conjunction with other forms of technical analysis for confirmation. Traders often look for other signs of a potential reversal, such as an increase in selling volume or bearish signals from technical indicators.

Last updated