The Gravestone Doji Forex Trading Strategy is simply based on identifying the gravestone doji candlestick and trading it when it forms in levels or zones of support and resistance, which I will explain below.
GRAVESTONE DOJI DEFINITION AND EXPLANATION
If you don’t know what a gravestone doji candlestick looks like, here’s an explanation and a chart showing you what it is..
The gravestone doji is a bearish reversal candlestick pattern so if the market is in an uptrend and if you see a gravestone doji form, it may be the first clue that the trend may start to reverse to a downtrend.
Notice on the chart below, the market was in an uptrend, until the gravestone doji candlestick formed. Then it fell down.
Timeframes: 1hr and up
Currency Pairs: Any
Forex Indicators: none required
GRAVESTONE DOJI FOREX TRADING RULES
- When price head up to a resistance level, watch to see if a gravestone doji candlestick forms.
- If it does, place a pending sell stop order 2-3 pips below the low of the gravestone doji and should a breakout happen, this will catch it.
- Place your stop loss 3-5 pips above the high of the gravestone doji candlestick.
- Use the previous swing lows as your take profit target level.
See chart below for example:
LOCATION OF THE FORMATION OF THE GRAVESTONE DOJI IS SUPER IMPORTANT
You won’t find the gravestone doji at the graveyard…so relax, ok? It’s forms on your trading charts.
When a gravestone doji forms at a location of a clear resistance level or zone, then it has a lot more significance compared to the one that forms anywhere on the chart.
Therefore, you should not take trades on every gravestone doji candlestick you see. The location matters.
In this chart below, notice that there are 2 instances of the gravestone doji forming but the 2nd location has a lot more significance because it formed at a clear resistance level.
So if you were watching this sell trading setup above, where would you have sold? Point 1 or 2? So now you understand what I’m talking about.
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