The Dark Cloud Cover is a two day pattern. It is made with one large bullish candlesticks and a large bearish candlestick. This is a trend reversal pattern which occurs on top of an uptrend.
Dark Cloud Cover is also called Bearish Piercing Line.
First day is a large bullish candlestick.
Second day is a large bearish candlestick. It opens above the first day’s high and closes within the price range of the 1st days’ real body. Strictly speaking the bearishness should penetrate more than 50% below the 1st day’s bullish real body.
Psychology of Dark Cloud Cover pattern is that a market is an uptrend and a large bullish candle appears on day 1 making a new high. On Day 2, the market starts with another new high and then the sell off begins resulting in elimination of over half of the gains made previous day. Basically the new high got rejected and bears are gaining control.
Dark Cloud Cover pattern can be dismissed if candlestick after the day2 finishes above the high of the dark cloud cover pattern.
Practice Dark Cloud Cover – Beginner
Practice Dark Cloud Cover – Intermediate