Subscribe to RSS feeds Bulkowski Blog via RSS

Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

Support this site! Clicking on his books (below) takes you to Amazon.com. If you buy ANYTHING, they pay for the referral.

Bulkowski's Gravestone Doji

Class Elliott Wave Fundamentals Psychology Quiz Research Setups Software Tutorials More...
Busted
Patterns
Candles Chart
Patterns
Event
Patterns
Small Patterns
Market
Industrials (^DJI):
Transports (^DJT):
Utilities (^DJU):
Nasdaq (^IXIC):
S&P500 (^GSPC):
As of 11/25/2014
17,815 -2.96 0.0%
9,203 36.27 0.4%
590 -0.79 -0.1%
4,758 3.36 0.1%
2,067 -2.38 -0.1%
YTD
7.5%
24.4%
20.3%
13.9%
11.8%
Tom's Targets    Overview: 11/14/2014
18,100 or 17,200 by 12/01/2014
9,300 or 8,700 by 12/01/2014
610 or 570 by 12/01/2014
5,000 or 4,500 by 12/01/2014
2,100 or 1,975 by 12/01/2014

Written and copyright © 2008-2014 by Thomas N. Bulkowski. All rights reserved.

My book, Encyclopedia of Candlestick Charts, pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

If you click on this link and then buy the book (or anything) at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski

$ $ $

Many people look at a gravestone doji with alarm, especially during an uptrend. They believe that it signals a bearish reversal. It does, but only 51% of the time. I call that random. The trend after the reversal does not amount to much, placing the performance rank at 77 out of 103 candles where a rank of 1 represents a trend that really moves. There are exceptions, of course, and a gravestone doji can signal a lasting trend change. The analysis I conducted (see my Candlestick Encyclopedia book) highlights several tips to identify gravestone doji candles that outperform. See the above link.

Gravestone Doji Important Results

Theoretical performance: Indecision to bearish reversal (during up trends)
Tested performance: Bearish reversal 51% of the time
Frequency rank: 42
Overall performance rank: 77
Best percentage meeting price target: 79% (bear market, up breakout)
Best average move in 10 days: 5.09% (bear market, up breakout)
Best 10-day performance rank: 27 (bear market, up breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal gravestone doji candlestick
Gravestone Doji
Top of page   More

Gravestone Doji Discussion

The actual, tested, behavior of the gravestone doji matches the theoretical performance: indecision or randomness, packaged into a tight little bundle of joy. Price closes at the bottom of the candlestick and price should breakout downward most often, which it does.

The gravestone doji is rare in a bear market, which I find odd. That can be due to the dearth of bear markets, but the ratio of bullish to bearish sightings is about 15 to 1.

Once price breaks out, the performance is lousy, ranking 77 -- near the bottom of the list. That means price does not trend far after a breakout. However, after an upward breakout in a bear market, price moves higher by 5.09% in 10 days, which is quite good. When you consider that price closed at the bottom of this candlestick, the climb is even higher (because I measure from a close above the top of the candlestick as the breakout, and do not start counting from the bottom of the doji). Using the height of the candle projected in the direction of the breakout shows that the trend meets the predicted target 79% of the time, which I consider acceptable.

Gravestone Doji Identification Guidelines

CharacteristicDiscussion
Number of candle linesOne.
Price trend leading to the patternNone required.
ConfigurationLook for a candle with a tall upper shadow and little or no lower one. The opening and closing prices should be within pennies of each other.
Top of page   More

Three Trading Tidbits for Gravestone Doji

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. Gravestone doji candles that appear within a third of the yearly low perform best -- page 233.
  2. Gravestone doji candles taller than the median show price that moves about 50% farther after the breakout than those shorter than the median -- pages 233-234.
  3. Ignore gravestone doji in congestion areas -- pages 234-235.

Gravestone Doji Example

The gravestone doji candlestick on the daily scale

The daily chart shows a gravestone doji candlestick (A) at the top of a short up trend. Notice how the opening and closing prices are at the bottom of the candle line with a tall upper shadow. In this example, price trends upward for a few days leading to the gravestone doji and then reverse direction -- falling. Price continues lower following the general market down.

-- Thomas Bulkowski

Top of page   More  

See Also

Copyright © 2008-2014 by Thomas N. Bulkowski. All rights reserved. So many stupid people and so few asteroids.