How to Trade the Dark Cloud Cover Candlestick Pattern

Traders might also look for a confirmation in the form of a bearish candle following the pattern.

Bearish Engulfing Pattern can be viewed as a more bearish formation, it completely rejects the gains of Day 1 and usually closes below the lows of Day 1. 

Even though the reversal that followed was much more significant than the first one, you still would have only made about twice your risk. A non-Forex dark cloud cover signal is similar.

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This article describes the dark cloud cover candlestick, including performance.

You may have already read my previous article, Trading the Bullish Piercing Candlestick Pattern ; the dark cloud cover signal is basically the bearish version of that pattern. I like to trade this pattern, because, like the harami patterns and the bullish piercing pattern, this pattern often leads to good risk to reward scenarios when it works out.

Also, the bullish piercing and dark cloud cover patterns are fairly common, providing candlestick traders with plenty of opportunities to test their skills and earn a profit. The dark cloud cover pattern is a moderately strong, bearish reversal signal. Like all bearish reversal signals, a true dark cloud cover pattern only occurs after an uptrend in price.

Steve Nison the authority on candlesticks says that a trend in price, as it relates to candlestick trading, may consist of just a few significant candles in one direction. This pattern consists of a relatively large bullish candlestick, followed by a bearish candlestick that closes deep into the real body of the first, bearish candlestick. A non-Forex dark cloud cover signal is similar.

The only difference being that the second, bearish candlestick needs to open above the close of the first, bullish candlestick; so there should be, at least, a small gap up before the second candlestick closes deep into the real body of the first one see the image above. The extreme liquidity of the Forex market especially in the major pairs ensures that there are rarely gaps in price from one candle to another.

You may come across a dark cloud cover candlestick pattern that resembles its non-Forex counterpart second candle opens above the close of the first candle. It is, however, acceptable that these two prices are equal CandleScanner implements this that way. Closing of the second candle needs to be below the midpoint of the first candle, but not lower than its opening.

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 the previous candle, proving the market weakness. Pattern's reliability is higher if the trading volume increases on the second line. As every other pattern, it should be confirmed by the following candles. Confirmation may be for example in the form of breaking a support level or a trend line.

If the pattern managed to reverse an uptrend, its second candle creates a strong resistance zone. A star is a candlestick with a short real body, like a doji or a spinning top, that gaps away from the real body of the preceding candlestick. There are three basic star patterns: The morning star and the evening star have a doji or a spinning top as the second candle It is a reversal pattern that consists of three bearish candlesticks that should come into consideration when it appears within an established uptrend, where it indicates a weakness in the uptrend and, potentially, the beginning of a down trend.

Each of the three candlesticks in the Three Black Crows pattern should be relatively long bearish candlesticks with little or no lower shadows. Each of the candlesticks in this pattern should mark a steady decline in It is a single candlestick pattern that consists of a Marubozu candlestick that can be bullish or bearish. A bearish belt-hold line consists of a single dark candlestick that opens at or near its high and closes at or near its low, while a bullish belt-hold line consists of a single rising candlestick that also opens at or near its high and closes at or near its low.

 

What is the 'Dark Cloud Cover' 

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.

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. Dark cloud cover candlestick pattern is a reversal price pattern that can be used as part of a trading strategy in terms of trade entry on price reversals. 

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Dark Cloud Cover Candlestick Chart Example

Trading the dark cloud cover candlestick pattern can be very profitable, if done the right way correctly identify and trade this candlestick signal. This article is devoted to the Dark Cloud Cover two-line pattern.. The Dark Cloud Cover is among the most popular candlestick patterns. Its first candle has to be a white candle appearing as a long line (White Candle, Long White Candle, White Marubozu, Opening White Marubozu or Closing White Marubozu).The second candle is a black candle .

The Dark-cloud Cover pattern is a bearish trend reversal or top reversal pattern that appears in an uptrend and signals a potential weakness in the uptrend. It is a two-candlestick pattern and is the antithesis of the piercing pattern. Dark Cloud Cover for ODFL | Don't Ignore This Chart | lokersumbagut.gas of Free Market Info. · All You Need To Succeed. · Try Free For 1 MonthTypes: SharpChart, Point & Figure, Seasonality, PerfCharts, MarketCarpet, Gallery Ch.

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