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The Dark Cloud Cover
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.
Identification:
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 _________________________________________________________________
As with all candlestick charts and patterns, this should be used with other technical analysis tools to further confirm its effectiveness.
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