Gravestone Doji

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Definition of 'Gravestone Doji'

The Gravestone Doji is a type of candlestick pattern used in technical analysis of financial markets. It typically appears on a chart during a trend and is formed by a single candlestick. The Gravestone Doji has a long upper shadow, no lower shadow, and a small body at the bottom of the candlestick.

The Gravestone Doji pattern suggests that the trend may be losing momentum and that a potential reversal may be on the horizon. The long upper shadow indicates that the bulls were in control of the market early on in the trading period, pushing prices up. However, by the end of the period, the bears were able to push the prices back down to the opening level, resulting in the small body at the bottom of the candlestick. This indicates a potential shift in market sentiment from bullish to bearish.

Traders often use the Gravestone Doji pattern as a potential signal to sell or to take profits, as it indicates that the upward trend may be losing momentum and that a reversal could be on the horizon. However, it is important to note that the pattern should be used in conjunction with other technical analysis tools and indicators to confirm the potential reversal and to make informed trading decisions.

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