UK Accounting Glossary
A gravestone doji is a variation on the doji candlestick with a long upper shadow and no lower shadow, such that it resembles an inverted “T.” The trading pattern that creates a gravestone doji proceeds with the price of a security opening at the low of the day, rising to a high, and then selling off back to the low. Depending on the trend that precedes it, a gravestone doji may signal a bullish reversal or a bearish reversal. Traders consider both the bullish and bearish gravestone doji a moderately reliable signal. A gravestone doji that occurs during an uptrend is bearish; the price advance to a daily high and sell-off back to the open suggests buying interest isn’t strong enough to sustain upward momentum. A gravestone doji that occurs during a downtrend is bullish; the price advance and sell-off back to the open suggests selling pressure was strong enough to prevent the advance but not enough to continue the trend. Trading on subsequent days confirms the reversal signalled given by the gravestone doji.
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This glossary post was last updated: 9th February 2020.