Dark Cloud Cover Candlestick Pattern
The dark cloud cover candlestick pattern is a bearish reversal signal. Whose presence indicates a probable reversal to a downward trend.
The Dark Cloud Cover pattern is a candlestick pattern that signals a potential reversal to the downside. It appears at the top of an uptrend and involves a large green or you can also say a bullish candle, followed by a large red or you can say a bearish candle.
Dark Cloud Cover Candlestick Pattern
You will see an uptrend before a dark cloud cover pattern is formed. This means that now you can get to see reversal in the market. You will see a bullish candle after the uptrend.
The next candle will open gap up. Also it will be a bearish candle. This Bearish candle will close below 50% of the previous Bullish candle.
After this the next candle will open gap down. In this way you can identify the dark cloud cover.
Key Points
- Uptrend
- Bullish Candle
- Gap Up
- Bearish Candle (close below 50% of previous bullish candles)
- Gap Down
Piercing Line vs Dark Cloud Cover
Piercing Line
You will get to see a downtrend before a piercing line pattern is formed. You can also say that you will see a piercing line pattern at the bottom of the down trend.
After this you will see a bearish candle. Then you will see a bullish candle with the gap down opening.
This bullish candle should close above 50% of the bearish candle. After this you will get to see the gap up opening.
Dark Cloud Cover
You will see an uptrend before a dark cloud cover pattern is formed. This means that now you can get to see reversal in the market. You will see a bullish candle after the uptrend.
The next candle will open gap up. Also it will be a bearish candle. This Bearish candle will close below 50% of the previous Bullish candle.
After this the next candle will open gap down. In this way you can identify the dark cloud cover.
Trade Setup – Dark Cloud Cover Pattern
The Dark Cloud Cover pattern is made up of two candles, one Bullish and one Bearish.
As soon as you get the breakdown of the low of the bullish candle, you can make your position in the market.
You should place your stop loss above the high of the bearish candle.
Example 1 – Dark Cloud Cover
With the help of these examples, you will be able to understand the dark cloud cover pattern better.
Example 2 – Dark Cloud Cover
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