In this tutorial, we'll explore how the Gravestone Doji candlestick pattern can help traders assess market gains. We'll also discuss a trading strategy that effectively incorporates the Gravestone Doji candlestick pattern.

• What is the Gravestone Doji Candlestick?
• Identifying a Gravestone Doji Candlestick
• What the Gravestone Doji Candlestick Indicates to Traders
• Effective Trading Tactics for Gravestone Doji Patterns

A gravestone doji is a bearish reversal candlestick pattern generated when the open, low, and closing prices are all close to each other and the upper shadow is lengthy. The extended upper shadow indicates that the bullish rise at the start of the session was beaten back by bears by the close, which commonly occurs right before a longer-term bearish decline.

The pattern's psychology is similar to that of other doji candles. The stock opens at or around the day's low, and bullish purchasing demand propels it higher. Bearish selling pressure eventually overwhelms purchasing demand, driving the price down and ending the day at the opening price. The long upper shadow predicts a long-term declining trend, but this is only a fiction.

When the open, low, and closing prices are almost equal, the Gravestone Doji chart pattern is formed. The lengthy upper shadow is the most crucial component of the Gravestone Doji.

Consider the following factors to determine whether the candlestick is a 'Gravestone Doji.'

• The Gravestone Doji is an inverted 'T'-shaped candlestick.
• The price opens and closes at the daily low or fairly close to it.
• The upper shadow should be long.
• Ignore the body color of doji, although red-bodied doji perform better than green-bodied doji.

A gravestone doji pattern signals a bearish reversal is on the way. The open, low, and closing prices do not have to be equal for the pattern to be acceptable, but there should be a little tail; otherwise, the pattern may be categorized as an inverted hammer, shooting star, or spinning top. The bulls attempt to push to new highs during the session, but the bears force the price action down to near the open at the end of the session. As a result, the bulls are losing momentum, as seen by the lengthy upper shadow.

The gravestone doji can appear towards the conclusion of a downturn, but it's more prevalent at the end of an uptrend. Despite its popularity, the gravestone doji has the same dependability difficulties as many other visual patterns. Traders are usually hesitant to move on a gravestone doji till the next candle confirms the reversal.

Ignore the gravestone doji if it appears as part of a congestion region, which is generally an area of horizontal price movement. Instead of starting a new trend, pricing is likely to continue moving horizontally. In fact, the easiest approach to read a gravestone doji is to assume that the current trend (up, down, or sideways) will continue, because that's what happens around half of the time.

• Doji with red bodies perform better than green ones.
• If you witness a doji near the top of an uptrend in a bear market, there's a 59 percent probability the price will reverse.