Dark Cloud Cover
Candlestick PatternsA two-candle bearish reversal pattern where a red candle opens above the prior green candle's high and closes below its midpoint. It warns of weakening bullish momentum.
What Is Dark Cloud Cover?
Dark cloud cover is a two-candle bearish reversal pattern and the mirror image of the Piercing Pattern. The first candle is a strong green (bullish) candle. The second candle opens above the first candle's high, then reverses to close below the midpoint of the first candle's body.
The second candle "covers" the gains of the first like a dark cloud, signaling that sellers have overwhelmed the prior session's buyers.
Trading the Pattern
On EUR/USD, a dark cloud cover at a weekly Resistance level gives a strong short signal. The fact that the price opened above the prior high and still failed shows decisive rejection. Enter short at the second candle's close. Stop loss goes above the second candle's high.
The deeper the second candle closes into the first, the more bearish the implication. If it closes below the first candle's open entirely, the setup becomes a Bearish Engulfing.
Context Requirements
Dark cloud cover is only valid after a clear Uptrend or at least a multi-candle rally. The pattern appearing in a Range-bound market or during a downtrend has no bearish reversal meaning. On lower timeframes, false signals are common, so focus on daily or 4-hour charts for higher reliability.
Related Terms
Piercing Pattern
A two-candle bullish reversal pattern where a green candle opens below the prior red candle's low and closes above its midpoint. It signals buying strength emerging in a downtrend.
Bearish Engulfing
A two-candle bearish reversal pattern where a large red candle completely engulfs the body of the preceding green candle. It signals strong selling pressure after a rally.
Evening Star
A three-candle bearish reversal pattern consisting of a large green candle, a small-bodied candle, and a large red candle. It signals the end of an uptrend.
Shooting Star
A bearish reversal candlestick with a small body at the bottom and a long upper wick. It appears at the top of an uptrend, showing that buyers were overwhelmed by sellers.