Gravestone Doji Candlestick: The Comprehensive Guide
The asset price was in the accumulation phase, but after the formation of a series of « Gravestone doji » patterns, it began to drop sharply. The patterns became a strong signal to close long trades and initiate short positions on the instrument. A « Gravestone doji » pattern comprises a single candlestick with no body and has only an upper shadow. This article reviews a very rare yet significant technical analysis pattern known as a « Gravestone doji » candlestick. The overview explains how effective a « Gravestone doji » pattern is in trading and provides guidance on how to properly integrate the pattern into your trading strategy.
Multiple types of doji lead to confusion for many technical analysts. Understanding these critical differences is essential gravestone doji candle when trading doji candles. It’s important to treat day trading stocks, options, futures, and swing trading like you would with getting a professional degree, a new trade, or starting any new career.
This is a perfect example of two similar candlesticks with different names. To trade this pattern, traders take a short entry when the price fails the low of the gravestone doji. Although a gravestone doji can mark the end of a downtrend, it’s more often seen at the end of an uptrend. Although the gravestone doji is popular, it suffers from the same reliability issues as many visual patterns.
The content should not be construed as containing any type of investment advice and/or a solicitation for any transactions. It does not imply an obligation to purchase investment services, nor does it guarantee or predict future performance. Sarah Abbas is an SEO content writer with close to two years of experience creating educational content on finance and trading.
After some time, the price formed a bullish « Dragonfly doji » pattern and broke through the upper boundary of the channel on increased volumes, continuing to rise. This was a confirmation of a « Gravestone doji » pattern, although belated. Overall, this results in its appearance resembling an inverted letter “T” or a gravestone. Otherwise, if it appears during a downtrend, then it simply validates the existing bearish directional bias.
A « Gravestone doji » pattern’s signal is much stronger at the top of a price trend, unlike the « Shooting star. » No, sometimes a « Gravestone doji » pattern occurs at the bottom of a downtrend when an asset is in an accumulation phase. Once a « Gravestone doji » candlestick appears at the bottom, bearish momentum may persist for a short while, but later the downtrend may reverse. A « Gravestone doji » pattern requires additional confirmation from other candlestick analysis patterns and technical indicators. A « Gravestone doji » pattern forms at uptrends’ peaks, but as mentioned above, it can also be spotted at the bottom. Therefore, there are two strategies for trading a « Gravestone doji » in a bullish and bearish trend.
The pattern is usually seen at the top of an uptrend, and its appearance suggests that sellers are starting to take control and push prices lower. It is considered one of the most reliable bearish reversal patterns, and traders often use it to confirm downtrends or to enter short positions. Traders use technical analysis, including tools like the gravestone doji, to exploit market trends.
Yes, the Gravestone Doji can be applied across various markets, including forex, stocks, commodities, and cryptocurrencies. It can also be used on different timeframes, from minute charts to daily charts. However, it’s important to combine it with other technical analysis tools and consider the overall market context for better accuracy. To confirm a Gravestone Doji, wait for the next candlestick to close below the low of the Gravestone Doji. This confirmation suggests that sellers are taking control, increasing the likelihood of a downward price movement. Waiting for confirmation helps avoid false signals and improves trading accuracy.
Unlike the bearish gravestone Doji candle pattern, the bullish version is considered less reliable. This is because the price bounced back up but finished the candle at the lowest level. Gravestone doji candlestick does not define the profit target so you have to use other strategies to find a safe exit. You only need to pay attention to the pattern’s key characteristics, as enumerated here. Ultimately, we were correct and the price breaks down further to make new daily lows. We exit the trade after we see two bullish candles in a row, our signal to exit.
It forms when the opening price, low price, and closing price are nearly identical. This creates a candlestick with a long upper wick (also called a shadow) and little to no lower wick. A « Gravestone doji » pattern with a long upper shadow can be identified near the 18.66 mark. After the pattern formed on the candlestick chart, the price sharply declined and crossed the MA50 dynamic support level, confirming the « Gravestone doji » pattern.