Definition
In the Bearish Gravestone Doji formation, the opening and closing prices are also the daily minimums. The Bearish Gravestone Doji forecasts an upcoming inclining trend. It appears at the end of ascending trends, warning traders about a possible upcoming reversal. It is the “brother” of the Bearish Shooting Star formation.
- Trend: Reversal
- Expected trend: Bearish
- Previous trend: Bullish
- Reliability: High
- Type: Bearish
- Number: 2
Recognition
- The market is in an upward trend.
- The first day is a white candle.
- On the second day, the market opens with a gap in the trend’s direction and forms a Doji which has no lower shadow (or only a small one).
- The Doji has a long upper shadow.
Interpretation
After the continuous increase, the Gravestone Doji signals a bearish reversal. The market opens at the daily minimum. Then the share price increases and reaches a daily maximum. The increase stops at one point and the share price drops back close to the opening price.
Important factors
Bearish Gravestone Doji is more reliable than the Bearish Shooting Star. The longer the upper shadow and the higher the price level, the more significant the reversal signal. The formation must be confirmed on the next day. The confirmation can be a trading day below the Gravestone Doji. The larger the gap, the more reliable the confirmation. A black candle with lower prices can be a confirmation as well.
