Dark Cloud Cover

 

The Dark Cloud Cover is a bearish candlestick pattern that signals a potential reversal or downturn in the market. And it is formed at the top of the trend characteristics:

1. Two Candles:

• The first candle is a bullish (upward) candle with a long body.

• The second candle is a bearish (downward) candle, which opens above the high of the first candle but closes well into the body of the first candle, typically below the midpoint.

2. Gap Up: The second candle should open above the high of the first candle, creating a gap (though not always a large one).

3. Bearish Close: The second candle must close lower than the midpoint of the first candle's body, indicating that the bulls have been overpowered by the bears.

4. Trend Reversal Signal: This pattern often appears after an uptrend, suggesting a possible reversal to a downtrend.

5. Volume Confirmation: Higher volume on the second candle adds strength to the pattern, as it shows strong selling pressure.