Dark Cloud Cover

DEFINITION of 'Dark Cloud Cover'

In candlestick charting, a pattern where a black candlestick follows a long white candlestick. It can be an indication of a future bearish trend.

Dark Cloud Cover

BREAKING DOWN 'Dark Cloud Cover'

Essentially, the large black candle is forming a "dark cloud" over the preceding bullish trend.

The dark cloud must have a closing price that is:
1) within the price range of the previous day, but
2) below the mid-point between open and closing prices of the previous day.

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    The dark cloud cover pattern is important for traders as a possible signal of market reversal to the downside. It is not ... Read Full Answer >>
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