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Definition

Gravestone Doji

What is Gravestone Doji?

A Gravestone Doji is a candlestick formation generated by negative setbacks whenever the initial, bottom and closing prices are all adjacent to one another and the top shadow is lengthy. The extended top shadow indicates that the bullish rise at the start of the session was beaten back by bears by the conclusion of the period, which usually occurs right before such a lengthier negative decline.

Understanding Gravestone Doji

Among all types of Doji formations, Gravestone Doji is one of them. However, unlike Doji star, which typically denotes marketplace ambivalence, the gravestone candlestick signals a price reversion. Yet, investors must wait for the following candle to emerge to verify the shift. It emerges during a market upswing, signaling the possibility of a negative reversion.

A bullish Dragonfly Doji is the complete antithesis of a Gravestone Doji. The Dragonfly Doji resembles a "T" and is produced when the volume's peak, opening, and closure are all near the same. These two forms are fundamentally the same occurrence, regardless of the fact that they will be discussed separately. 

One has to be bullish and the other pessimistic when both are validated, and they can also emerge in the reverse circumstance. This Doji, for example, can be preceded by an upswing, or a bullish dragonfly is seen before a downturn. Volumes and the next candle are required for both layouts to be verified. These patterns can be thought of as pictorial imagery of ambiguity instead of as clear bearish or bullish signs.

Practical Example

The Doji pattern is seen in this daily chart of Andhra Bank. It created a Doji at 73 after an earlier increase of roughly 7% from the level of 68 and then reverted its pattern to return to the values of 69.

In Sentences

  • We can think about a dragonfly or a grave if we want to remember the pattern of Gravestone Doji and Dragonfly Doji.

 

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