Doji candlesticks. Rare species.

We have already learned about such a concept as Doji candlesticks, what they are and how they should be used in our trade. This article will discuss some of the more rare varieties of Doji candlesticks, namely “dragonfly” and “gravestone”. Like all Doji candlesticks, dragonfly and gravestone candlesticks indicate a trend reversal. Therefore, if there is no obvious trend before these candles, they should be ignored.

Candlestick “dragonfly”

The “dragonfly” Doji candlestick is a candle with a small body or its actual absence and a long lower shadow without an upper shadow.

Fig. 1. Candlestick “dragonfly” Doji

 

“Dragonfly” Doji should be placed after a downtrend or descending movement, which on different timeframes can be expressed by one candle. After the final formation of the Doji Dragonfly candlestick, it is expected a downtrend reversal and price increase. In fact, this candle indicates that the market was trying to break through significant support, but it failed due to circumstances. In addition, this candlestick indicates that buyers prevail over sellers.

Candlestick “gravestone”

The “gravestone” Doji  candlestick is a candle with a small body or its actual absence and a long upper shadow without the lower shadow.

Fig. 2. Candlestick “gravestone” Doji

 

A candlestick “gravestone”Doji is located after an uptrend or ascending movement. After that, we should expect a reversal of the uptrend to the downrend. This candlestick indicates the inability of buyers to overcome significant resistance. Candlestick “gravestone” Doji indicates the advantage of sellers over buyers.

Example

Fig. 3. An example of candlesticks  “gravestone” Doji working out

 

The price chart for the EUR/USD pair shows two examples of practicing  “gravestone” Doji candlesticks, which indicate a reversal of the uptrend to a downtrend.

In the first case (the left Doji candlestick in the figure), the formation of the reversal “gravestone” candlestick is preceded by a pronounced upward trend, which also accelerated growth. But, after the reversal candlestick, it should be very rapid downtrend. Also, this Doji candlestick indicates the formation of a significant price level.

In the second case (the right Doji candlestick in the figure), the trend is formed after the bullish candle, which is not preceded by an uptrend. At the same time, the signal for a trend reversal is fully justified, confirming the effectiveness of this signal.

The main disadvantage of the dragonfly and gravestone Doji candlesticks is their rarity, which can be aggravated by terminal errors. But despite it these signals have a very high degree of refinement.

Anton Hanzenko