Last Updated on 08/04/2024 by Ndanileka

What is a Gravestone Doji Candle

The Gravestone Doji candlestick is a pattern formed when the opening, closing, and low are all near the same price level and there is a long upper wick (tail).
The pattern resembles an inverted “T” or a tombstone, hence its name “Gravestone.” The pattern indicates that the price moved significantly higher from the open during the trading session, but eventually fell back to close near or at the opening level.

Traders consider the Gravestone Doji a bearish reversal signal, indicating potential weakness in an uptrend. This pattern may suggest a shift in market sentiment from bullish to bearish.

Gravestone Doji Identification

To identify a Gravestone Doji Candle, two conditions need to be fulfilled:

Condition 1:

The lower of the open or close must be within 5% of the day’s low. The formula is expressed as:
MIN(Open, Close) – Low ≤ (High − Low) × 0.05

Condition 2:

The upper tail, represented by the distance from the high to the maximum of open or close, must be greater than or equal to 75% of the entire candle’s length. The formula for this condition is:
MAX(Open, Close) ≥ (High − Low) × 0.75

Meeting these two conditions indicates the presence of a gravestone doji candle.

Note that the percentages utilized to define the gravestone doji are subjective and flexible, resembling an art rather than a precise science. Adjustments can be made based on the desired sensitivity of your trading system.

Gravestone Doji Google Sheets Formula

In the below example, Cell B1 = “CRM ” (Salesforce Inc)

Step 1: Verify if the lower of the open and close is within 5% of the low.

1.1 Find the length of the lower wick, which is the distance between the Min(Open, Close) and the Low.

=MIN(GOOGLEFINANCE(B1,"priceopen"),GOOGLEFINANCE(B1,"price")) - GOOGLEFINANCE(B1,"low")

1.2 Calculate 5% of the candle’s length (High – Low).

=(GOOGLEFINANCE(B1,"high")-GOOGLEFINANCE(B1,"low"))*0.05

1.3 Compare the values from steps 1.1 and 1.2; the condition is satisfied if the lower wick is less than 5% of the candle’s length.

=MIN(GOOGLEFINANCE(B1,"priceopen"),GOOGLEFINANCE(B1,"price")) - GOOGLEFINANCE(B1,"low")<=(GOOGLEFINANCE(B1,"high")-GOOGLEFINANCE(B1,"low"))*0.05

Step 2: Check if the upper wick is greater than 75% of the candle’s length.

2.1 Find the length of the upper wick, which is the distance between Min(Open, Close) and the High.

=GOOGLEFINANCE(B1,"High") - MAX(GOOGLEFINANCE(B1,"priceopen"),GOOGLEFINANCE(B1,"price"))

2.2 Calculate 75% of the candle’s length by subtracting the low from the high and multiplying by 0.75.

=(GOOGLEFINANCE(B1,"high")-GOOGLEFINANCE(B1,"low"))*0.75

2.3 Compare the values from steps 2.1 and 2.2; if the upper wick is greater than 75% of the candle’s length, the condition is satisfied.

=GOOGLEFINANCE(B1,"High") - MAX(GOOGLEFINANCE(B1,"priceopen"),GOOGLEFINANCE(B1,"price")) >= (GOOGLEFINANCE(B1,"high")-GOOGLEFINANCE(B1,"low"))*0.75

Step 3: Complete the formula by combining both conditions into a single IF statement using the AND() function.
The AND function verifies if both conditions are fulfilled.
If true, it returns TRUE; otherwise, it returns FALSE.
The result is then passed to the IF() function:
If TRUE, “Gravestone” returned,
if FALSE, a blank cell is returned

=IF(AND(MIN(GOOGLEFINANCE(B1,"priceopen"),GOOGLEFINANCE(B1,"price")) - GOOGLEFINANCE(B1,"low")<=(GOOGLEFINANCE(B1,"high")-GOOGLEFINANCE(B1,"low"))*0.05,GOOGLEFINANCE(B1,"High") - MAX(GOOGLEFINANCE(B1,"priceopen"),GOOGLEFINANCE(B1,"price")) >= (GOOGLEFINANCE(B1,"high")-GOOGLEFINANCE(B1,"low"))*0.75),"Gravestone","")

Gravestone Doji Scan

The Gravestone scanner spreadsheet identifies Gravestone formations among S&P100 listed stocks. Similar to the Dragonfly Doji scan, it enhances the ability to spot potential market reversals. You can customize the scanner’s parameters to align with your trading system, eliminating the need for manual pattern scanning.

Happy Trading!