Gravestone Doji: Reversal or Trap?

A gravestone doji forms when price rises throughout the session and then closes at the low, leaving a long upper wick and a tiny or nonexistent body.

What the pattern is

The candle opens, trades higher, and then sells off to finish where it began or lower. The result is a shape that looks like an inverted T: a small horizontal line at the bottom and a tall shadow above it. Because the close sits at the low, buyers who stepped in during the advance are shown to have given up all of their gains by the end of the period.

What forms it

Three conditions must line up. First, the close must sit at or very near the session low. Second, the upper wick must be noticeably longer than the body itself. Third, the candle must appear after a clear upward move; without that prior advance the same shape carries no special weight. When these three elements coincide, the pattern is considered complete.

What confirms it

Confirmation rests on the location of the close. If price finishes anywhere above the low, the candle is simply a long upper wick and is not treated as a gravestone. Only when the close lands on the low does the shape earn the label and suggest that the earlier buying interest has evaporated.

How it fails

The pattern fails whenever the close is not at the low. Traders who label every tall wick a gravestone overlook this single requirement and therefore misread the signal. Without the close anchoring the bottom of the range, the candle does not carry the same implication of rejected highs.