Gravestone doji candlestick chart pattern is formed after an extended move when the opening and closing price are at the low of the day and has a long upper shadow. The open and close should be as close as possible. There should be no or very small lower shadow.
The price moves higher all the day, then reverses and closes at the low point of the day.Higher price is bringing in sellers or buyers are becoming less aggressive at higher price points. Whenever such formation happens STBT(Sell Today Buy Tomorrow) type of traders become active.
If Gravestone doji get formed after an extended upmove , its usually a sign of weakness and bulls getting tired. The probability of reversal has increased with Gravestone doji formation, but need to wait for price confirmation to initiate a trade. If the length of upper shadow is not long enough then its like any other doji formation which points to indecision.
If Gravestone doji is formed after a sell off some people consider this as bullish sign.
But as mentioned above always treat doji as point of indecisiveness with a possibility of trend reversal.There can be bullish or bearish bias based on the shadow length and where the doji are formed in the chart.
Look out for Gravestone doji formation near supports, breakouts, near important pivot points, fibonacci retracement levels and near critical moving averages like 21,34,63,100,200 etc. Formation near such areas increases the probability of reversal.
Always note that In trading there is no certain event it is only probability of occurrence of that event.