Gravestone Doji
Gravestone Doji
By JAMES CHEN
Updated August 01, 2021
Reviewed by SOMER ANDERSON
Fact checked by TIMOTHY LI
KEY TAKEAWAYS
• A gravestone doji is a bearish pattern that suggests a reversal followed by a downtrend in
the price action.
• A gravestone pattern can be used as a sign to take profits on a bullish position or enter a
bearish trade.
• The opposite of a gravestone doji is a dragonfly doji.
While the gravestone doji can be found at the end of a downtrend, it's more common to be found
at the end of an uptrend. Although the gravestone doji is popular, it suffers from the same
reliability issues as many visual patterns. Generally traders will not act on a gravestone doji unless
the next candle provides confirmation of a the reversal.
The following chart shows a gravestone doji in Cyanotech Corp.'s stock following a significant
high volume uptrend, which could indicate a bearish reversal over the near-term following
the breakout.
In this example, the gravestone doji could predict a further breakdown from the current levels to
close the gap near the 50- or 200-day moving averages at $4.16 and $4.08, respectively. Traders
would also take a look at other technical indicators to confirm a potential breakdown, such as
the relative strength index (RSI) or the moving average convergence divergence (MACD). Day
traders may also put a stop-loss just above the upper shadow at around $5.10, although
intermediate-term traders may place a higher stop-loss to avoid being stopped out.
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GRAVESTONE DOJI DEFINITION
By JAMES CHEN
Updated August 01, 2021
Reviewed by SOMER ANDERSON
Fact checked by TIMOTHY LI
they can appear in the opposite scenario. For example, a gravestone doji can be followed by an
uptrend or a bullish dragonfly may appear before a downtrend. Both patterns need volume and
the following candle for confirmation. It is perhaps more useful to think of both patterns as visual
representations of uncertainty rather than pure bearish or bullish signals.
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