Definition
Bullish Gravestone Doji is a special formation, because it includes a Doji (opening and closing prices are the same) which has only upper shadow. Bullish Gravestone Doji formation forecasts an upcoming ascending trend, signalling a trend reversal with medium reliability. It is similar to the Bullish Inverted Hammer formation, which signals a possible reversal in an inclining trend.
- Trend: Reversal
- Expected trend: Bullish
- Previous trend: Bearish
- Reliability: Moderate
- Type: Bullish
- Number: 2
Recognition
- The market is in a downward trend.
- The first day is a black candle.
- The second day is a Doji with only upper shadow.
- It is not necessary to have a gap between the two candles.
Interpretation
The share opens lower than the previous day’s closing price. On the next day, the price starts to increase but closes at the daily minimum. This movement makes the short position owners to stay, making an increase possible. This formation cannot give a reversal signal with high reliability. It will be only known on the next day. If the share opens above the Bullish Gravestone Doji’s body, the investors who opened a short position during the formation, have lost their money.
Important factors
The Bullish Gravestone Doji must be confirmed on the next day. The confirmation can come from an opening above the Bullish Gravestone Doji’s body. The larger the gap, the more reliable the confirmation. A white candle with higher share price can also mean a confirmation.
