Technical Glossary / Candlestick Patterns
Dark Cloud Cover
An up candle followed by a down candle that closes below the midpoint of the up candle's body.
Teaching sketch. It shows the shape, not a live quote and not a trade signal.
Definition
Dark cloud cover is the bearish mirror of the piercing pattern. After a rally, a bullish candle is followed by a bearish candle that opens above the prior close and closes down through the midpoint of the prior body, without closing below the prior open. A close below that open would be a bearish engulfing.
How to identify it
Two candles. Second open above the first close. Second close below the midpoint of the first body and above the first open.
Bullish reading
A recovery back through the dark-cloud high cancels the warning. Do not treat a mid-trend down candle that missed the midpoint as this pattern.
Bearish reading
At resistance, the close through the midpoint says sellers undid most of the prior gain. The pattern high is the reference a short has to respect.
Common mistakes
Using it in the middle of a trading range, where up and down candles alternate and midpoint closes happen constantly.
Limitations
Like the piercing pattern, the textbook form wants a gap. In markets that do not gap, lean on the midpoint close and the prior trend.
This note explains the term. A sketch shows the shape of the idea. Neither is a recommendation, a signal, or a comment on any security. Indicator settings and exchange conventions differ. Check the live chart and the contract specification before you use a number.