Bearish Gravestone Doji Pattern

by · December 31, 2009

BEARISH GRAVESTONE DOJI PATTERN (BGDP)
graves of bulls who died in defense of their territory

Characteristics:
1. Market is on an uptrend;
2. Day 1 has a white candlestick at the higher end of the trading range;
3. On Day 2, prices open with a gap and there is a Doji with no lower shadow; and
4. The Doji’s upper shadow is usually long.

Brief Explanation:
This is a pattern where the opening and closing prices are at the low of the day. The BGDP is a top reversal pattern. It appears during an uptrend.

A Gravestone Doji after a rally has bearish implications. The market opens on the low of the day. Then prices start to rally. But the rally cannot be sustained and prices go down to the day’s lows. This means trouble for the longs. The Gravestone Doji stands for the graves of the bulls who died defending their territory.

Notes:
1. The longer the upper shadow and the higher the price level, the more bearish the implications of the BDSP will be
2. A confirmation is required the next day to be sure of the bearish implications of the BDSP (through a next day opening that is below the Gravestone Doji or a black stick with lower prices).