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.
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.
_______________________________________________________________
_______________________________________________________________
|
Learn to Find The Best Trades! Over 80% Profitable Trades Using Candlesticks Instant Download
Candlestick Express Class
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
Free Training Videos
Learn to Trade the Stock Market! Discover How to Make Great Profits Part-Time Four FREE Bonuses Included Trade Your Way To Financial Freedom:
A Stock Trading Educational Masterpiece! Learn What it Takes to Become a Successful Stock Trader Best Online Stock Broker Click The Image to Learn More Free Stock Analysis  Learn More Here |
Return from "Dark Cloud Cover" to the "Candlestick Patterns" Page
Return from the"Dark-Cloud Cover" to the Home Page: "Stock Market for Beginners"