Gravestone Doji | RizeTrade

What is the Gravestone Doji Candlestick Pattern?

The Gravestone Doji is a bearish reversal candlestick pattern that typically forms at the top of an uptrend. It occurs when the open, low, and close prices are nearly the same, but the candle has a long upper shadow and little to no lower shadow.

This shape indicates that buyers pushed prices significantly higher during the session, but sellers later regained control, driving the price back down to close near the open. The Gravestone Doji visually represents a failed attempt by bulls to continue the uptrend, often signaling that bearish pressure is building.

🔑 Key Takeaways

 📉 The Gravestone Doji signals a potential bearish reversal near the top of an uptrend or resistance level.
 💨 It indicates buyers lost momentum after driving prices higher.
 ✅ A confirmation candle closing below the Doji’s low validates the reversal signal.
 🎯 Reliability increases when it forms at key resistance, Fibonacci zones, or trendline tops.
 ⚔️ The pattern marks a potential shift from bullish to bearish market control.

🔍 How Reliable Is the Gravestone Doji Pattern?

The Gravestone Doji is often seen as a warning of bearish reversal — but how accurate is it when tested across real trading conditions?

🧪 Our Backtest Setup

Statement:
We analyzed the Gravestone Doji using our Candlestick Pattern Performance Matrix to measure its effectiveness as a bearish reversal signal across diverse markets and timeframes.

Evidence:

• 1,162 total instances of the Gravestone Doji

• Timeframes: 15M, 1H, 4H, and Daily

• Tested across stocks, forex, and crypto markets

• Evaluated confirmation strength through candle close behavior and post-pattern trend direction

Insight:
Testing across multiple volatility environments revealed that the Gravestone Doji’s reliability depends heavily on context — especially on whether the market is near a resistance zone or in a weakening uptrend.

📈 Backtest Results

Statement:
We measured standalone accuracy and performance with added confirmation factors.

Evidence:

Insight:
Accuracy improved by up to 11 percentage points when the Gravestone Doji formed at or near key resistance levels, confirmed by increased volume or bearish momentum signals like a MACD crossover.
This suggests that while the pattern alone provides moderate reliability, pairing it with clear contextual confirmation significantly enhances its performance.

Traders can strengthen their strategy by reviewing their historical trade performance to see how Gravestone Doji setups behave within their preferred markets and timeframes.

📉 How to Trade the Bearish Gravestone Doji Pattern?

This reversal signal appears near market tops, showing that buyers drove prices higher but failed to hold gains — a classic sign of exhaustion before potential decline.

🔍 Entry

Spot the Gravestone Doji at the end of an uptrend or near key resistance.
Ensure the open, low, and close are clustered near the same level, with a long upper shadow and little to no lower wick.
Enter short once the next candle closes below the Doji’s low, confirming that sellers have regained control.

🛡️ Stop-Loss

Set your stop just above the Gravestone Doji’s high to protect against false reversals or brief continuation rallies.
Follow 1–2% capital risk management per trade to maintain consistent exposure control.

🎯 Target

For conservative setups, aim for the nearest support zone or previous swing low.
Aggressive traders can target Fibonacci retracement levels (50% or 61.8%) of the prior advance or apply a 2:1–3:1 reward-to-risk ratio for optimal trade planning.

Trading Strategies that Use the Gravestone Doji Candlestick Pattern

Gravestone Doji with RSI Overbought Confirmation

Concept
This strategy combines the Gravestone Doji with momentum exhaustion signals from the RSI to identify potential bearish reversals at the top of an uptrend.

Setup
Spot a Gravestone Doji forming near the top of a sustained rally.
Check if the RSI is above 70, indicating overbought conditions.

Short Setup
Enter short when the next candle closes below the Doji’s low.
Place the stop-loss above the Doji’s high.

Risk Management & Exit
Target the next support level or use a 2:1 reward-to-risk ratio.

What Gives It an Edge
Combining a reversal candle with an overbought oscillator helps confirm that buyers are losing control and a reversal is likely.

Gravestone Doji with Moving Average Rejection

Concept
This method uses the 50 EMA as a dynamic resistance filter to validate reversals signaled by the Gravestone Doji.

Setup
Add the 50-period EMA to your chart.
Watch for a Gravestone Doji forming at or just above the EMA, suggesting rejection at a key trend level.

Short Setup
Enter short when the next candle closes below both the Doji’s low and the EMA.
Set a stop-loss above the Doji’s high.

Risk Management & Exit
Take profit at the previous swing low or near the next EMA crossover.

What Gives It an Edge
The EMA acts as a trend filter, confirming that the Doji forms at a potential turning point within a weakening uptrend.

Gravestone Doji at Fibonacci Resistance

Concept
This setup merges price structure with Fibonacci retracement levels to identify high-probability reversal zones.

Setup
Identify an uptrend and draw a Fibonacci retracement from swing low to swing high.
Look for a Gravestone Doji forming near the 61.8% or 78.6% retracement level.

Short Setup
Confirm with a bearish candle closing below the Doji’s low, then enter short.
Place a stop-loss above the Doji’s high.

Risk Management & Exit
Target the next support level or the 100% retracement of the prior move.

What Gives It an Edge
Confluence between Fibonacci resistance and a reversal candle strengthens the validity of the setup and improves entry precision.

Real Trading Example of the Gravestone Doji Candlestick Pattern (NVIDIA)

Context
NVIDIA (NVDA) rallied from $430 to $462, showing strong bullish momentum.
At the top, a Gravestone Doji formed — a candle with a long upper shadow and open, close, and low near $460.

Price Behavior
The following session closed below the Doji’s low at $457, confirming bearish reversal momentum.

Trade Setup

• Entry: $457 (below Doji’s low)

• Stop-Loss: $463 (above Doji’s high)

• Target: $445 (previous support zone)

Result
Within three sessions, NVDA dropped to $445, delivering a 2:1 reward-to-risk outcome.

Best Indicators to Combine with the Gravestone Doji Candlestick Pattern

Common Mistakes and How to Avoid Them

Recognizing Failure Signals
Avoid entering before confirmation — a close below the Doji’s low is essential.
Be cautious of low-volume Dojis, which often lack conviction.
Do not trade the pattern in sideways or choppy markets, where reversals are less reliable.

Tips for Trading the Gravestone Doji

• Always wait for confirmation before entering.

• Combine with resistance levels and momentum indicators for higher accuracy.

• Avoid counter-trend trades unless strong confluence supports reversal.

• Use strict risk management and adjust position sizing to volatility.

🌘 Gravestone Doji vs. Shooting Star: Which Bearish Signal Performs Better?

Both patterns are visually similar and signal potential uptrend exhaustion — but how do they actually perform in live-market backtests?

🧪 Test Setup

Statement:
We tested the Gravestone Doji and Shooting Star patterns to measure their reliability as bearish reversal signals.

Evidence:

• Dataset: 1,800+ historical formations

• Markets: Forex and major indices

• Timeframes: 1H, 4H, and Daily

• Entry rule: Short entry at the next candle open following pattern confirmation

• Filter: Pattern must appear near a prior swing high or resistance zone

📊 Backtest Results

💡 Insight

Both patterns signaled bearish reversals effectively, but the Shooting Star showed slightly stronger follow-through due to its defined body near the low, suggesting clearer seller dominance.
In contrast, the Gravestone Doji reflected a moment of indecision — strong rejection from highs, yet requiring confirmation from subsequent candles to validate momentum.

Traders aiming to track how these signals perform in their own setups can benefit from reviewing performance over time to identify which pattern aligns better with their risk approach.