Dark Cloud Cover Pattern
A two-candle bearish reversal pattern where a bearish candle opens above the prior high and closes below the midpoint of the bullish candle.
Quick Answer
A two-candle bearish reversal pattern where a bearish candle opens above the prior high and closes below the midpoint of the bullish candle.
What Is the Dark Cloud Cover Pattern?
The Dark Cloud Cover is the bearish counterpart to the Piercing Line. It forms at the top of an uptrend and consists of a bullish candle followed by a bearish candle that opens above the previous high but closes below the midpoint of the first candle's body. This "dark cloud" covering the bullish gains signals potential reversal.
How the Dark Cloud Cover Forms
- 1First candle: Strong bullish candle in uptrend
- 2Second candle: Opens above first candle high
- 3Second candle: Closes below first candle midpoint
- 4The deeper the penetration, the stronger the signal
How to Confirm the Pattern
Best Timeframes for Dark Cloud Cover
How to Trade the Dark Cloud Cover
- →Identify bearish reversals in uptrends
- →Time short entries after confirmation
- →Set stops above the second candle high
- →Combine with resistance levels
Common Mistakes to Avoid
Detect Dark Cloud Cover Automatically
VaultCharts automatically detects Dark Cloud Cover patterns on your charts. No manual analysis needed - the pattern is highlighted with entry zones and targets.