Gravestone Doji on the NDX on Aug. 21, 2000 very closely resembles today's:
stockcharts.com[h,a]daclyyay[d20000501,20001004][pb20!b50!b200!c13!c20!c50!i!d20,2!f][vc60][iUb14!La12,26,9!Lg!Li14,3!Lh14,3!Lp14,3,3!Ll14]&pref=G
It was not confirmed the next day, and the index went on to advance an additional 7% off that close.
Important element of today's candle - confirmation.
Note the indicators were similar to today's at that time, and the candle touched the upper BB towards the end of an uptrend, just like today.
Before any trend can be determined, confirmation is needed.
Most of these reversals have taken place at important moving averages or BB's. Those need to be watched closely on any drop in addition to the indicators on the intra-day charts.
Look at March 2000 on the NDX:
stockcharts.com[h,a]daclyyay[d20000101,20000604][pb20!b50!b200!c13!c20!c50!i!d20,2!f][vc60][iUb14!La12,26,9!Lg!Li14,3!Lh14,3!Lp14,3,3!Ll14]&pref=G
We had a gravestone doji WITH confirmation, but we still went up 3% above that close before dropping 10% below that close. However, by mid-March we were 8% ABOVE the close on the gravestone doji.
All of these instances were bull market tops, but it just shows that the gravestone doji needs confirmation, and we can't forget our T/A after we get that. |
