Dark Cloud Cover Candlestick Pattern

What the Dark Cloud Cover pattern means

The red candle opening higher then closing deep into the prior green body shows buyers were trapped and sellers seized control intraday. The further the red candle closes into the green body, the more bearish the signal. It is a milder cousin of the bearish engulfing.

How the Dark Cloud Cover is traded

• →Look for the red candle to close below the midpoint of the prior green body.
• →Confirm with a lower close the following period before shorting.
• →Stop goes above the high of the two-candle pattern.
• →Stronger at resistance and on higher volume.

Common mistakes

• ✕Trading it when the red candle fails to close past the midpoint.
• ✕Confusing it with a bearish engulfing, which fully engulfs the prior body.