The Dark Cloud Cover




The Dark Cloud Cover is a bearish reversal signal.

Think of this candlestick charting pattern as a partial solar eclipse blocking out part of the sun.

A Dark-Cloud Cover Pattern occurs when a bearish candle on Day 2 closes below the middle of Day 1's candle.

In addition, price gaps up on Day 2 only to fill the gap and close significantly into the gains made by Day 1's bullish candlestick.

The rejection of the gap up is a bearish sign in and of itself, but the retracement into the gains of the previous day's gains adds even more bearish sentiment. Bulls are unable to hold prices higher, demand is unable to keep up with the building supply.


Dark Cloud Cover




Since the Dark-Cloud Cover is a bearish reversal signal, it must come after a rally.



Identification:

  • First day is a long white day
  • Second day is black with an open above the high of the previous day
  • Second day closes within but below the midpoint of the first day’s body. The greater the penetration of the black body's close into the prior white body, the greater the chance for a top.



What it signals:

In an uptrend the market gaps open, but loses ground to fall below the midpoint of the previous day. The-Dark Cloud Cover pattern suggests an opportunity for the shorts to capitalize on the next day’s open: a warning sign to bullish investors.

The-Dark Cloud Cover pattern is the opposite of the Piercing Line pattern.


_________________________________________________________________

Conclusion

_________________________________________________________________


Another prime use of this candlestick charting pattern is utilizing it as a prior resistance area.

As with all candlestick charts and patterns, this should be used with other technical analysis tools to further confirm its effectiveness.


_______________________________________________________________



Candlestick Resources



_______________________________________________________________


Candlesticks Mastery E-Course:

Candlestick Mastery

Learn to Find The Best Trades!

Over 80% Profitable Trades Using Candlesticks

Instant Download

Learn More Here


Candlestick Express Class

Steve Nison

Train with the Steve Nison, The World-Renowned Father of Candle Charting!

Gain the Knowledge of CandleSticks to Achieve your trading goals in Record Time

Learn More Here




Free Training Videos




Video Lessons and Advice From Stock Market Experts


Learn More Here




Trading Master Plan E-book:

Learn to Trade the Stock Market!

Discover How to Make Great Profits Part-Time

Four FREE Bonuses Included
Instant Download.

Learn More Here



Trade Your Way To Financial Freedom:

Trade Your Way To Financial Freedom

A Stock Trading Educational Masterpiece!

Learn What it Takes to Become a Successful Stock Trader

Learn More Here



Best Online Stock Broker

Click The Image to Learn More




Free Stock Analysis



Learn More Here






Stock Market Coach




Page copy protected against web site content infringement by Copyscape



Return from "Dark Cloud Cover" to the "Candlestick Patterns" Page


Return from the"Dark-Cloud Cover" to the Home Page: "Stock Market for Beginners"