Gravestone Doji Candlestick Patterns, Meaning, & Examples

For the exit points, you may consider using stop-loss orders or take-profit orders. Stop-loss orders are used to limit potential losses, while take-profit orders are used to lock in profits. Set the stop loss above the high of the Gravestone Doji pattern and set the profit target at the next support level. You may also consider using a trailing stop-loss order, which adjusts the stop-loss price as the market moves in your favor. It may also be possible to use the opposite signal as an exit method. For example, you can exit when a bullish reversal candlestick pattern forms at a support level.

1. The next candle confirms the initial theory of a possible trend reversal at this resistance point.
2. It may also be possible to use the opposite signal as an exit method.
3. It forms when an asset’s open, low, and close prices are the same.
4. A gravestone doji can happen in both a bull run and a bearish trend.

Is a Gravestone Doji a Bearish Reversal Pattern?

After conducting 1,553 trades on 575 years of data, we confirm the win rate to be 0.65% per trade. A 0.65% win rate means that trading a Gravestone Doji long will net you an average of 0.65% profit per trade if you sell after ten days. Conversely, short-selling a Gravestone Doji, you should expect to lose -0.65% per trade. When trading a Gravestone Doji, one needs to be aware that this pattern moves in a bullish direction 57% of the time, regardless if it occurs in an up or downtrend. Also important is that this pattern does not indicate a particular reversal over a 10-day period; the data suggests one should go long.

Profit Targets for the Gravestone Doji Pattern

For this reason, the Gravestone Doji (or any Doji candle, for that matter) should never be taken as a reliable trading signal in isolation. This is particularly true during lower volume trading sessions, where a lone candle can reveal little about overall market sentiment. Gravestone doji candlesticks are reversal candles at the top of an uptrend or near resistance levels. They are shaped like an upside-down T with a slim real body and signify a possible reversal to the downside.

Entering a Gravestone Doji Trade

This candlestick is easily recognized by its long upper shadow and a small or nonexistent lower shadow, resembling a tombstone. It typically represents a situation where a security opens and closes at roughly the same price, despite trading significantly higher during the session. It looks like an upside-down “T” pattern with little to no real body.

How to Trade 3 Bar Reversal Pattern

Traders and investors generally use this chart pattern to identify price reversal and enter a position at the beginning of a new trend. The gravestone doji pattern implies that a bearish reversal is coming. The open, low, and closing prices can be equal or almost equal for the pattern to be valid.

The ideal strategy would be to pair the Gravestone Doji other proven indicators. The Gravestone Doji is a candlestick pattern that reflects market indecision. It is identified by its resemblance to a gravestone, formed by the candle’s open, close, and low prices being closely aligned.

We have defined ALL 75 candlestick patterns and put them into strict trading rules that are testable. Each single candlestick pattern is backtested and includes rules, settings, statistics, probabilities, and performance metrics. We recommend backtesting gravestone doji candle absolutely all your trading ideas – including candlestick patterns. Third, the gravestone doji tends to be a relatively accurate method of identifying reversals. Finally, it can easily be used together with other technical analysis tools.

When it happen in an uptrend, the price normally opens and then shoots upwards and then drops and closes at the opening price. There are three main types of doji patterns, which include the classic doji, dragonfly doji, and the gravestone doji. In this article, we will look at the gravestone doji and how you can trade it. For example, there could be certain days of week or month that are extra bullish or bearish. While price data only shows the movements of a market, the volume gives access to additional information uncovering the conviction of the market.

The second step is to identify when the gravestone doji pattern happens. As you can see, the price reversed when the Doji pattern happened. On the other hand, when the gravestone doji happens in a bearish trend, the price opens at a lower level, attempts to recover, and then close at the opening price. A gravestone doji can happen in both a bull run and a bearish trend.