Short-sellers look for such a candlestick to enter the market. Although gravestone doji can appear in any scenario, it is most efficient when it occurs at the top of the upward trend. This is another indicator for traders to start looking for profit-booking. It demonstrates that the bears gained momentum by the session's close and erased the day's entire gain.
If the trend witnesses slower growth, then this may be an indication of a shift in investor sentiment. This also raises concern over the trend's strength. This candlestick is usually seen during a strong uptrend or downtrend signalling the reversal may emerge if the bulls / bears start exhibiting exhaustion in near term. If this candlestick appears on the chart, one can expect the market to move towards a consolidation phase before breaking out in either direction. This candlestick has a long upper and lower shadow with both the opening and closing prices near the half-way mark. If the immediate session closes on a positive note, then the doji is described as a positive indicator and vice versa.
One can use this candle to make a buy or sell decision. The strength and momentum for both seems to be at par, resulting in the price settling at the equal level. In simple terms, such a candle indicates that the bulls and bears are uncertain about the trend. The different forms of a doji candlestick are: long-legged doji, Gravestone doji, and Dragonfly doji. A Doji candlestick is formed when the open and close prices of a stock or index are nearly the same, which represents indecision among traders.
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