What is a Dark Cloud Cover Pattern?

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The dark cloud cover pattern a type of candlestick formation that is characterized as a bearish indicator. It signifies a bearish reversal and the loss of pressure on the side of buyers.

Two candlesticks form the pattern. The first candlestick should have a strong, relatively long, white real body.

The second candlestick should be black with its higher side of the real body placed higher than the prior candlestick’s real body and its lower side of the real body placed at least halfway down into the prior candlestick’s real body.

The more the second candlestick covers the first one, the more significant the bearish signal is.

Dark Cloud Cover Pattern

Under this formation, resistance at higher levels is observed despite the experienced by the currency pair strong session.

This pattern may send false signals if the real body of the white candle does not close at least half way into the real body of the black candle. In such a case traders should address the formation with extreme caution.

A recommended course of action is to apply patience and wait for confirmation of the trend reversal by the candlestick that follows.