Dark Cloud Cover Candlestick Pattern Full Guide

Dark cloud cover is a bearish candlestick pattern that forms after an uptrend. It is characterized by a black candlestick that opens below the close of the previous white candlestick and closes below its open. The formation of this pattern signals that the bulls are losing control and the bears are gaining momentum.

Dark Cloud vs Engulfing Candle

The first candle is bullish and the second candle is bearish, with the open of the second candle being above the close of the first candle. The second candle then closes below the midpoint of the first candle’s body.

How to trade Dark Cloud Cover Pattern

The Dark Cloud Cover is a candlestick pattern that occurs at the top of an uptrend. It is created when the candlestick for the current day opens above the previous day’s close, and then closes below the previous day’s open.

This creates a black candlestick with a long upper shadow and a small lower shadow. The Piercing Pattern is a candlestick pattern that occurs at the bottom of a downtrend. It is created when the candlestick for the current day opens below the previous day’s close, and then closes above the previous day’s open. This creates a white candlestick with a long lower shadow and a small upper shadow.

Bullish Dark Cloud Cover Candlestick

With the Dark Cloud Cover, you are looking for a reversal of an uptrend. The trend is starting to turn bearish, as evidenced by the black candle which has opened higher but closed lower than the prior candle. With the Piercing Pattern, you are looking for a reversal of a downtrend. The trend is starting to turn bullish, as evidenced by the white candle which has opened lower but closed higher than the prior candle.

How to Trade the Dark Cloud Cover Candlestick Pattern

• The Dark Cloud Cover Candlestick Pattern is a bearish reversal pattern that can be used to enter short positions. The pattern is composed of two candlesticks:
• The first candlestick is a long white candlestick that closes near the highs of the session.
• The second candlestick is a black candlestick that opens above the close of the first candlestick and closes below its midpoint.

How to identify a Dark Cloud on Forex Charts

The pattern should form after a sustained uptrend.

• The first candlestick should be a long white candle with little or no upper shadow. This indicates that bulls are in control of the market.
• The second candlestick should be a black candle 2B Reversal Pattern with a long lower shadow. This indicates that bears are taking control of the market.

When these conditions are met, you can enter a short position at the open of the third candlestick. Your stop loss should be placed above the high of the second candlestick.