A gravestone doji is a candlestick pattern that is commonly used in technical analysis to help identify potential reversals in the price of a financial instrument, such as a stock or currency. The pattern forms when the opening and closing prices of an asset are the same or very close, and the high and low prices are also close to each other.

Key characteristics of a gravestone doji:

1. **Appearance:** The gravestone doji has a small body near the bottom of the candlestick, with a long upper shadow and little to no lower shadow. The opening and closing prices are typically close to the low of the session.

2. **Long Upper Shadow:** The long upper shadow represents the intraday price movement where the asset’s price moved significantly higher during the trading session but closed near or at its opening price.

3. **Little to No Lower Shadow:** The absence of a lower shadow or a very short lower shadow indicates that the closing price is close to the low of the session.

4. **Bearish Reversal Signal:** The gravestone doji is often considered a bearish reversal signal when it appears after an uptrend. It suggests that buyers initially pushed prices higher during the session, but by the close, sellers were able to bring the price back down, signaling potential weakness in the uptrend.

5. **Confirmation:** Traders typically look for confirmation of the bearish reversal by observing subsequent price action. This may include a lower close on the following trading day or additional bearish candlestick patterns.

It’s important to note that while the gravestone doji can be a signal of a potential trend reversal, it is not a foolproof indicator, and traders often use it in conjunction with other technical analysis tools and signals for more comprehensive analysis.

Technical analysts use candlestick patterns like the gravestone doji to gain insights into market sentiment and potential shifts in supply and demand. It’s crucial for traders to consider the overall market context, trend, and other factors when interpreting candlestick patterns and making trading decisions. Additionally, individual traders may have their own risk management strategies, and it’s advisable to use multiple indicators for confirmation before making significant trading decisions based on a single pattern.