Candlestick Patterns
Resources for Advanced Trading

Candlestick Dark Cloud Cover Patterns

Candlestick Patterns

The Dark Cloud Cover pattern is formed when a white candle is followed by a black candle that opens higher than the white candles close and when the black candle closes below the mid-point of the white candles body. If the black candle is not able to close below the mid-point of the white candles body, then one should consider the formation as Incomplete Dark Cloud Cover formation.

The Dark Cloud Cover pattern is a good indicator of potential bearish market reversals. Often the Dark Cloud Cover pattern will form at the exact high (end) of a bullish trend. Conservative investors should also wait for confirmation of this pattern formation. Confirmation of any bearish pattern occurs when a bearish pattern is followed by a black candle with a lower close, lower high and lower low price.

Notice: Sometimes, by the time the confirmation candle is formed, the majority of the bearish trend has occurred. By this I am attempting to inform investors that sometimes as aggressive short position after a Dark Cloud Cover pattern has formed will result in good profits by the time the confirmation candle forms. Aggressive investors should always use a protective stop level to protect against unwanted losses. An appropriate protective stop level for the Dark Cloud Cover pattern would be at, or near, the highs of the Dark Cloud Cover pattern.

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