Gravestone Doji

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DEFINITION of 'Gravestone Doji'

A type of candlestick pattern that is formed when the opening and closing price of the underlying asset are equal and occur at the low of the day. The long upper shadow suggests that the day's buying buying pressure was countered by the sellers and that the forces of supply and demand are nearing a balance. This pattern is commonly used to suggest that the direction of the trend maybe be nearing a major turning point.

Gravestone_doji.gif

BREAKING DOWN 'Gravestone Doji'

A gravestone doji pattern is a common reversal pattern used by traders to suggest that a bullish rally or trend is about to reverse. It can also be found at the end of a downtrend, but this version is much more rare. As you can see from the chart, on the day of the gravestone doji (shown within the black box), bearish traders realized that the price was pushed up to unjustifiably high levels so they send the price back up to where the stock opened. The close near the day's low suggests that supply is starting to outweigh demand again.

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RELATED FAQS
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    A trader can implement an aggressive forex trading strategy designed to obtain maximum profit from recognizing a rounding ... Read Full Answer >>
  3. How do I build a profitable strategy when spotting a Gravestone Doji pattern?

    The gravestone doji is formed by a candlestick with a long upper shadow and no lower shadow, indicating that the price attempted ... Read Full Answer >>
  4. How is a Gravestone Doji Pattern, followed by a Dragonfly Doji, interpreted by analysts ...

    A gravestone doji candlestick pattern followed immediately by a dragonfly doji candlestick would most likely be interpreted ... Read Full Answer >>
  5. How effective is creating trade entries after spotting a Gravestone Doji pattern?

    The gravestone doji, with its identical open, close and low, and exaggerated upper shadow, can be a dramatic reversal signal. ... Read Full Answer >>
  6. How are Gravestone Doji patterns interpreted by analysts and traders?

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