Identifying the gravestone doji

When the open and close are both equal to the low of the day, the result is the most bearish of doji: the gravestone doji. Figure 5-21 is a good example of a bearish gravestone doji.

Figure 5-20:

A long black candle as a failing sell signal.

Figure 5-20:

A long black candle as a failing sell signal.

Figure 5-21:

A bearish gravestone doji.

The price activity that creates a gravestone doji begins and ends at the low of a day. The progression for the day includes the following:

1. A security opens and trades up during the day, as the bulls dominate the activity.

2. Higher prices attract sellers, and the selling becomes strong enough to overwhelm the bulls.

3. As the bears take over, the price is moved back down to the open, which was also the low of the day.

Closing at this level after trading up during a day doesn't bode well for the bulls in the near term. Figure 5-22 provides an example of such a day, which would be a fearful one for the bulls.

Was this article helpful?

0 0

Post a comment