What is Gravestone Doji Candlestick?
Gravestone Doji is a type of candlestick where the open close and low price are same or very very close to each other. There is always a long wick associated with Gravestone Doji candle and it looks like inverted “T” .
Underlying Psychology of Gravestone Doji
This means that, there were many market participants ready to buy the underlying stock at any price during the session and due to this high demand the price kept on increasing, however towards the end of session seller emerged and they sold the stock so much that price closed at the days low/near day’s low.
If you think about it,Gravestone Doji is Bearish in nature because initially buyers were in control and they pushed the price up. Towards the end of the session,the sellers emerged and they did heavy selling and bought the price towards the days low.
How to Trade Dragonfly Doji
Decision: In case of Gravestone Doji,traders should start looking for selling opportunities, sell price should be around the closing price of Gravestone Doji.
Stop loss: What if the market reverse its direction after printing the Gravestone Doji ? The high of the candle will act as stop-loss in case that happen.
Main Points to Consider
- If Gravestone Doji appears after a uptrend,at resistance or after a long white Marubozu candle, odd moves in your favor.
- Gravestone Doji with large wick and with big volume provide better performance overtime.
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I believe in analysis and not forecasting.Nicolas Darvas