Reversal Incoming CRM Sells Are PossibleWhat do you know about Gravestone Doji?
The Gravestone Doji candlestick pattern can be interpreted as a bearish reversal when it occurs at the top of uptrends. The Gravestone Doji can help traders see where resistance to a pricing increase is located. It is typically used with other technical indicators to identify a possible uptrend. What Does a Gravestone Doji Look Like? The Gravestone Doji chart pattern is an inverted “T”-shaped candlestick created when the open, high, and closing prices are nearly equal. The most important part of the Gravestone Doji is the long higher shadow.
Why Is the Long Upper Shadow Important?
Technicians generally interpret the long upper shadow as meaning that the market is testing to find where supply and potential resistance are located. Bulls Rejected by Bears The construction of the gravestone doji pattern occurs when bulls press prices upward. However, an area of resistance is found at the high of the day, and selling pressure pushes prices back down to the opening price. Therefore, the bullish advance upward was rejected by the bears.
Limitations of the Gravestone Doji
Although the Gravestone Doji can indicate the coming of a bearish price change, traders should not rely on this indicator alone: True Gravestones are rare since open, high, and closing prices are seldom the same. Successful traders will typically wait until the following day to verify the possibility of a downtrend after a Gravestone. If the Gravestone appears after a pricing downtrend, it can indicate that a price increase may follow. A Gravestone accompanied by higher-than-usual volume is more reliable than one with low volume.
