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The Dark-cloud Cover pattern is a bearish trend reversal or top reversal pattern that appears in an uptrend and signals a potential weakness in the uptrend. It is a two-candlestick pattern and is the antithesis of the piercing pattern. As it is a bearish trend reversal pattern, the dark-cloud cover pattern is only valid if it appears in an uptrend.

The first candlestick in this pattern must be bullish candlestick with a large real body. The following candlestick should be a bearish candlestick that opens above the high of the first candlestick but closes well into the real body of the first candlestick, signaling a change in sentiment. The pattern is more reliable if the second candlestick closes below the middle of the first candlestick, with the deeper the penetration of the second candlestick the more significant it becomes.

Let’s have a look at what a dark cloud cover tells us about the state of the market in a daily chart! The market, which is in an uptrend is filled by the positive sentiment. The bulls are in absolute control, and that buyers try so hard to continue to support the rising trend in the second candlestick pattern. This sentiment is also carried on to the opening of the next day as the market gaps up. The buying pressure continues to make to market to go higher. However, the market loses its last share of buying power and the bears take control and push the price to cover the gap. At that stage, selling pressure adds up as more investors start becoming worried that the market isn’t as strong as they believed. More and more people start selling their positions, and the market closes below the midpoint