what does a gravestone doji tell you 
as noted above a gravestone doji is used in technical analysis it is a strategy that some investors use to make trades they rely on statistical trends such as past performance price history and trading volume to make their trading decisions they often employ charts and other tools to identify opportunities in the market one of these is the gravestone doji the gravestone doji pattern implies that a bearish reversal is coming it looks like an inverted t with a high upper shadow the open low and closing prices can be equal or almost equal for the pattern to be valid there should also be a relatively small tail or else the pattern could be classified as an inverted hammer shooting star or a spinning top the market narrative is that the bulls attempt to push to new highs over the session but the bears push the price action to near the open by the session close so the long upper shadow represents the bulls losing momentum while the gravestone doji can be found at the end of a downtrend it is 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 traders will generally not act on a gravestone doji unless the next candle provides confirmation of a reversal the first and best way to get a grip on how technical analysis works is to learn about it read books take courses both on and offline talk to other traders and visit websites that can help teach you some tricks of the trade once you ve mastered the basics you ll be able to develop your own style trading the gravestone dojitraders will often exit long positions or initiate short positions after identifying a gravestone doji pattern although it s important to use this candlestick pattern in conjunction with other forms of technical analysis as a confirmation investors often look at the volume associated with the session as well as activity from the previous session as potential indicators of the reliability of the pattern the following chart shows a gravestone doji in cyanotech s stock following a significantly 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 gravestone doji vs dragonfly dojithe opposite pattern of a gravestone doji is a bullish dragonfly doji the dragonfly doji which isn t a very frequent pattern looks like a t and it is formed when the high open and close of the session are all equal or nearly the same unlike the gravestone doji the dragonfly doji pattern has a long lower shadow this implies aggressive selling during the period of the candle although these two formations are talked about as separate entities they are essentially the same phenomenon when confirmed one can be called bullish and the other bearish sometimes 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 a doji is a trading session where the security s opening and closing levels or prices are either equal or virtually equal the doji is represented on the chart as a candlestick limitations of a gravestone dojithe gravestone doji can be used to suggest a stop loss placement and eyeball a profit taking plan on a downtrend but these are less precise methods than other technical indicators provide although reliability increases with volume and a confirming candle the gravestone doji is best accompanied by other technical tools to guide trading 