Dark Cloud Cover

Appearance: This is a two-candlestick reversal pattern at the top of an up-trend and consists of a strong white (green) candle with the following candle opening above the body of the first candle and closing at or near its own low - which is well within the body of the former candle.

Criteria: The lower the close of the second candle down the body of the prior candle, the stronger the reversal signal.

Effect: The Dark Cloud Cover represents a strong reversal signal.

Note: In candlestick descriptions, "white (green)" refers to an up-bar, and "black (red)" refers to a down-bar. Individual traders prefer different bar colors. For example, we personally trade with candles set to green for up and red for down. (TradeStation defaults their Candlesticks to this color convention.) Most related textbooks use white (or green, if color is used) for up and black (or red) for down.