Dark Cloud Cover is one of the Candlestick Chart's bullish trend reversal pattern. it will be consider to be more valid when it occurs after a rally in other words at the top of the bullish trend. It consists of two candlestick charts. The long black candlestick body followed by long white candle body. This shows that the underlying made high with long white candle but some reason it was not able to hold on to the gain and lost the momentum in the next day.
The black candle has to open above the close of the white handle and has to close at least mid of the white candle body. This implies that the buyers are exhausted and sellers are started dominating it. If the next day the asset closed below the black candle body the pattern will be confirmed.
One can go short on the asset by keeping the high of the black color candle as stop loss. There is a possibility the asset might have already far away from the black candle high. So the trader has to consider the risk reward ratio before initiating the trade.
The black candle has to open above the close of the white handle and has to close at least mid of the white candle body. This implies that the buyers are exhausted and sellers are started dominating it. If the next day the asset closed below the black candle body the pattern will be confirmed.
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| Dark Cloud Cover in Candlestick Chart |