Dark Cloud Cover

The dark cloud cover is a bearish candlestick pattern in technical analysis that signals a potential reversal in an uptrend. It occurs when a long bullish candlestick is followed by a long bearish candlestick that opens above the previous day’s close but closes below the midpoint of the prior candlestick. This pattern suggests that sellers have overtaken buyers, potentially leading to a downward price movement.

Example

A trader notices a dark cloud cover pattern forming on the chart of a stock that has been in an uptrend, indicating that the trend may reverse, prompting the trader to consider selling.