Definition: Get the highest rated stock from Americanbulls for this pattern >>>
Gravestone Doji is a pattern in which the opening and
closing prices are at the low of the day. The Bearish
Gravestone Doji Pattern is a top reversal pattern. It
appears during an uptrend representing a possible reversal
of trend just like its cousin Bearish Shooting Star
Pattern.
Recognition Criteria:
1. Market is characterized by uptrend.
2. We see a white candlestick at the higher end of the
trading range in the first day.
3. Prices open with a gap and we see a Doji with no
lower (or almost no) shadow on the second day.
4. Upper shadow of the doji is usually long.
Explanation:
Gravestone Doji after a rally has bearish implications
for the following reason. The market opens on the low
of the day. Then prices start to rally (preferably to
a new high). The rally cannot be sustained during the
day and prices plummet to the day’s lows meaning
trouble for longs. The Gravestone Doji represents the
graves of those bulls that have died defending their
territory.
Important Factors:
The Bearish Gravestone Doji Pattern has more bearish
implications than a Bearish Shooting Star Pattern.
The longer the upper shadow and the higher the price
level, the more bearish the implications of the Bearish
Gravestone Doji Pattern will be.
A confirmation is required on the following day to
be more certain about the bearish implications of the
Bearish Gravestone Doji Pattern. Confirmation may be
in the form of the next day opening below the Gravestone
Doji. The larger the gap the stronger the confirmation
will be. A black candlestick with lower prices can also
be another form of confirmation.
