Bulkowski’s Dark Cloud Cover

It is, however, acceptable that these two prices are equal CandleScanner implements this that way.

If the pattern managed to reverse an uptrend, its second candle creates a strong resistance zone. 

The dark-cloud cover pattern is a powerful pattern which when formed implies that there will be very little or at time even no retracements. As with a bearish engulfing pattern, bulls push the price higher at the open, but bears take over later in the session and push the price sharply lower.

The Dark-Cloud Cover Pattern 

Dark cloud cover is a signal that tells an obvious reversal of a trend and is the bearish counterpart to the piercing pattern. It is one of the 12 major candlestick patterns and it is named the dark cloud cover because it looks like a dark cloud .

The resistance zone created by the first Dark Cloud Cover pattern is working, stopping the market increase. In the analysis of the Figure 2. On the Figure 3. However, the pattern appeared far above the trendline, and its confirmation is even more required. The market has to break the trendline after the pattern occurrence.

We can notice the Doji candle, which indicates the market indecision. The following candle, White Spinning Top , cancels the Dark Cloud Cover pattern closing price above the pattern's second line.

To see more detailed statistics, for other markets and periodicity try our CandleScanner software. The dark-cloud cover pattern is a bearish pattern while the piercing pattern is a bullish pattern.

Just as depicted at the start of this article, the dark-cloud cover is a bearish pattern meaning that the trader should always ensure that he or she trades put options. The trader should be sure that it really the dark-cloud cover pattern that has formed by looking at the previous trend to ensure that it was a bullish trend and then identifying whether the two candles have been formed. Longer the Time Period — More Powerful is the Pattern The normal warning applies to this pattern also; the lager the time-frame, the more powerful this pattern becomes.

However, with that said, the chosen expiration date should not be as big as the time frame that was chosen. The dark-cloud cover pattern is a powerful pattern which when formed implies that there will be very little or at time even no retracements. More importantly, this pattern can be traded using custom indicators so as to increase the profitability. These indicators can be the Ichimoku Kinko Hyo. With the Ichimoku Kinko Hyo, if the dark-cloud cover touches the Tenkan line, which is normally red in colour, the trader can then be sure of a true reversal.

One can easily confuse the dark-cloud cover with the bearish engulfing. A dark-cloud cover pattern at or near a trendline or a resistance line can be used as confirmation that the test of the trendline is more likely to fail. The high point of the dark-cloud cover pattern can also serve as a resistance line, and a possible location for a stop loss.

This is a single candlestick pattern that with a short real body, little or no upper shadow and a long lower shadow that must be at least twice as long as length of the real body.

The color of the candle is not import, only its location in the current trend. The Hammer pattern is called a takuri in Japanese, which means testing the water for its depth.

This is the bullish version of the pattern. Engulfing Pattern Bullish Engulfing The Engulfing pattern is a reversal candlestick pattern that can appear at the end of an uptrend or at the end of a downtrend. The first candlestick in this pattern is characterized by a small body and is followed by a larger candlestick whose body completely engulfs the previous candlestick's body.

The colors of the candlesticks that make up the engulfing pattern are important.

 

Dark Cloud Cover Candlestick Chart Example 

The Dark Cloud Cover is a bearish reversal candlestick pattern where a black candlestick opens above a white candlestick's close and below its midpoint.

This article describes the dark cloud cover candlestick, including performance statistics and rankings, written by internationally known author and trader Thomas Bulkowski. Dark Cloud Cover. Dark Cloud Cover is a bearish candlestick reversal pattern, similar to the Bearish Engulfing Pattern (see: Bearish Engulfing Pattern).There are two components of a Dark Cloud Cover formation. 

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BREAKING DOWN 'Dark Cloud Cover'

Dark cloud cover is a signal that tells an obvious reversal of a trend and is the bearish counterpart to the piercing pattern. It is one of the 12 major candlestick patterns and it is named the dark cloud cover because it looks like a dark cloud . Jun 01,  · Dark cloud cover patterns are 3 candlestick patterns. The dark cloud cover pattern can signal a bearish reversal in a bullish trend. This patterns is more effective on a daily chart rather than a shorter time frame. Options trading as well as swing trading can benefit from this pattern. Chart patterns are made up of [ ]5/5(5).

What is a Dark Cloud Cover and how it looks like; The REAL meaning of a Dark Cloud Cover; What’s the difference between Bearish Engulfing and Dark Cloud Cover. The Dark Cloud Cover is a classic bearish reversal pattern, which appears at the end of an uptrend. After definite increases, the second candle of the pattern opens creating a price gap, however, closes below the midpoint of .

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