The Gravestone Doji

The gravestone doji is a bearish reversal candlestick which is very rare. It signals a possible bearish reversal and works like a topping tail. While it does not work 100% of the time, the presence of a gravestone doji can be very intimidating and therefore traders should take note when they see this pattern appear in their stocks.

gravestone doji

The above is how a gravestone doji looks like. The open and the close is the same and there is a tail at the top. Because the gravestone doji is so rare, sometimes I do not require the body (open and close) to be the same price. A little variation is alright. And as I said, the gravestone doji works just like the topping tail. They both point to a possible reversal in the stock.

grave stone doji

The chart above of JWN shows how powerful the gravestone doji can be. Although the stock did not drop immediately after the appearance of the doji, nevertheless, the stock was not able to go above the highs of that pattern. It eventually formed a double top and the stock declined from there.

That is why it is most important to pay attention when your stock forms a gravestone doji. Just because it does not drop tomorrow or next week, the doji may be warning us of a weakness in the stock.

KSS above is another great example of how a gravestone doji can warn of a potential fall in your stock. A gravestone doji formed but there was no reversal! The stock climbed higher in the next few weeks. But after that, the stock went below the 20 MA, then it cross below the 50 MA and finally drop below the 200 MA and ended much lower from where we first saw the gravestone doji. When you see a doji like this, always beware!

A gravestone doji that appears at important areas such as the 50 MA resistance and the trendline packs a powerful punch to a stock. In the chart above, notice how KR tried to rally only to form a gravestone doji at such powerful resistance areas. This confirmed the viability of the resistance and the stock quickly dropped lower.

Just because the gravestone doji is a powerful reversal pattern, it does not mean it will work all the time. No indicator or even support or resistance work 100% of the time. In this case, the stock exhibited a gravestone doji but the market quickly ignored this pattern. Well, the pattern appear because of the resistance area on the left but since this stock was in an uptrend, the momentum was to the upside.

A continuation on the upward direction beat the patterns signal ability. So, not everything works all the time. I just showed it to you here to let you know that not everything works 100% of the time.

MMM is a perfect example of what resistance and a gravestone doji can do to your favorite stock. The stock had a bearish 20 cross 50 MA and it made a new low. It tried to rally after the new low but immediately met resistance and formed a gravestone doji. Traders who saw this pattern could have shorted this stock and made some handsome profits.

  • If you like this article, consider starting the Stock Market Course. It is free and jam packed with great information for newbies.
  • Want to have updates on the financial markets? Join my Telegram Channel. Dstockmarket.com Channel.
  • Help support this page and press the Facebook Like button below. Thanks!

Recent Articles

  1. Technical Analysis Of KLSE July 2018

    Jul 09, 18 12:39 PM

    What's going on in Malaysia's stock market? Having dropped tremendously since the election, is there any hope for the bulls?

    Read More

  2. Dow Finally Makes A Bullish Cross, More Bulls To Come

    May 21, 18 08:12 AM

    After a very long time trading below the powerful 20 MA and 50 MA, the Dow Jones is now back in bull mode trading above the 20 MA and 50 MA. What's more is it is experiencing a bullish cross.

    Read More

  3. Technical Analysis Lessons From FLR

    Apr 27, 18 05:31 AM

    In this article we will examine why FLR went from a downtrend to the start of a new uptrend. We will also look at some chart patterns and how it affects the stock.

    Read More

  4. Technical Analysis Lessons From AMZN

    Apr 26, 18 06:19 AM

    If you are interested to know why AMZN went up so much, this lesson will show you why AMZN was able double its stock price.

    Read More

  5. Technical Analysis Of Maybank

    Apr 26, 18 05:04 AM

    The surge in foreign funds investing in finance stocks has lifted many Malaysian bank stocks higher. Maybank is now making a nice uptrend in the daily chart. Will it be able to overcome the old highs…

    Read More

New! Comments

Have your say about what you just read! Leave me a comment in the box below.