Ever wonder about the potential of a Gravestone Doji? That Japanese candlestick pattern that runs much higher off of the open, typically a higher open and often a gap, and then falls back to close unchanged. Aptly named, connoting death, it looks like an antenna, but of course those did not exist in 17th century Japan, the roots of candlestick patterns. Gravestone Dojis, as their name suggests, are a reversal signal in an uptrending market.
Like most patterns they need to be confirmed by a lower close before trading off of the information, but once they do they can be powerful. One stock Greenbrier (GBX) has a PhD in Gravestone Doji lately. The chart above highlights the December 19th Gravestone Doji and also one on September 14th. Look at the reaction both times, drops of over 22%.
But there were signs that a reversal may occur even without being a student of Japanese candlestick techniques. Each time the reversal happened at the top of the rising channel after a day with stronger than normal buying volume and with the relative Strength Index (RSI) in overbought territory. So are you looking for Gravestone Dojis yet?
Disclaimer: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
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Yule Logs And Gravestone Dojis
Published 12/25/2012, 01:29 AM
Updated 05/14/2017, 06:45 AM
Yule Logs And Gravestone Dojis
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