The gravestone doji candlestick pattern is a three-candle pattern. Gravestone doji is used by traders for technical analysis. Gravestone Doji is a candlestick. pattern examined when the opening and closing values of the asset are equal, which occurs at the end of the day.
A gravestone doji candlestick pattern can signal to take profits on a long position, as it shows the uptrend could be ending or entering a new short position. Gravestones are also called tombstones or headstones.
Doji is commonly found in a candlestick pattern in which the asset’s price closes and opens at the same point. Doji, represented by a small candle, has a relatively tiny body. An Example of Gravestone Doji
Green Gravestone Doji opens near the high of the session and closes near the low of the session. While Red Gravestone Doji is similar but appears to be in a downtrend.
What does a Gravestone Doji mean?
A Gravestone Doji is a bearish doji, that is observed when the opening and closing price of a security is are equal during a trading session. The gravestone doji gets its name because the pattern resembles the gravestone with a long shadow pointing upwards.
The gravestone doji is considered one of the significant doji, which indicates a shift in the market. It is generally seen as a bearish reversal pattern that occurs after an uptrend. The pattern is formed when the security market opens up at a higher price.
The reason why a doji is considered one of the significant doji is because it represents a balance between bears and bulls during trading sessions. The word gravestone dates back to the 12th and 13th centuries, it was developed by the Japanese for analyzing rice trading.
Benefits of a Gravestone-Doji Candlestick Pattern
The following are the top benefits of gravestone doji:
Indicating potential trend reversal: A gravestone-doji can suggest that a bullish trend is losing momentum and a bearish trend could be on the horizon.
Offering a low-risk trading opportunity: Gravestone-doji provides traders with a low-risk trading opportunity by placing a stop-loss order above the height of the candlestick.
Enhancing technical analysis: Gravestone-doji is a useful tool for technical analysis that uses candlestick charting to analyze the market.
Providing entry and exit points: Traders can use gravestone-doji to identify key support and plan their entry and exit points accordingly.
The gravestone candlestick pattern is a useful tool for traders because it helps them decide on entry and exit points of the trade.
Opposite of Gravestone-Doji Candlestick Pattern
The opposite of the gravestone-doji candlestick pattern is the bullish dragonfly doji. The bullish dragonfly doji is a bullish reversal pattern that occurs when the opening and closing prices are at or near the high of the candlestick.
The bullish dragonfly is opposite to the gravestone-doji as it is a bullish reversal pattern and suggests a potential trend reversal to the upside while the gravestone-doji is a bearish reversal pattern that suggests a potential trend reversal to the downside.
Construction of Gravestone Doji Pattern
The construction of the bullish gravestone-doji pattern occurs when the bulls can press prices upward. It is a helpful pattern to help traders visually see where resistance and supply are likely to be located. After an uptrend, the gravestone-doji can give signal to traders that the uptrend could be over. A potential generator could be a break of the upward trendline support.
Gravestone-Doji resembles a “T” shape and it tells about changes in the stock market. It shows action between buyers and sellers hinting that the trend might turn around. These candlestick shapes are like secret messages helping traders understand where the market is going next.
