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Dark Cloud Cover
Signal
Bearish
Win Rate
62%
Avg Move
-7.6%
Reliability
Medium

Pattern Definition

Dark cloud cover is a two-candle top reversal: a large bullish candle followed by a bearish candle that opens above the prior high but closes more than 50% into the first candle's body.

Market Psychology

Bears ambush the bulls at highs. The second candle opens higher but bears aggressively push price down, closing deep into bull territory. An open-high-close-low shows sudden sentiment shift.

Trading Application

A topping warning after an uptrend (win rate 62%). Consider exiting longs after the bearish candle closes. Stop-loss above the second candle's high. Deeper penetration (>70%) = stronger signal.

Important Notes

The bearish close must penetrate more than 50% into the bullish body — less than 50% is merely indecision. Must appear after a clear uptrend.