Gravestone Doji is a specific type of candle stick pattern. it is a bearish indicator used by technical analysts and can be seen on a price chart. It is formed when the open and close prices are near each other and the shadows are very long. The extended upper shadow indicates that at the end of the session, bears overtook the bullish rise that started the session. This frequently occurs right before a longer bearish downtrend.
How to identify a Gravestone Doji
To identify a Grave Stone Doji on a price chart;
you need to look for a candlestick with the same open and close prices.
check the length of the wicks. The upper wick should be at least twice as long as the body of the candlestick, and the lower wick should be at least the same length as the body.
The Gravestone Doji has a longer upper shadow without a lower shadow and looks like an upside-down capital letter.
How to Trade a Gravestone Doji
Gravestone Doji can be used as a bearish reversal signal, but it’s important to confirm the signal with other technical analysis tools. Once the subsequent candle closes below the candle stone Doji’s closing price, you can then take a position. After you’ve confirmed the reversal, you can enter a short position by setting your stop-loss above the Gravestone Doji’s high. If you want to take a long position, you can do so above the Gravestone Doji’s closing price and set your stop-loss at the lowest point before taking your profit.
