How to spot a Dark Cloud Cover
- Appears after a rally
- Candle 1 is a long green candle
- Candle 2 opens higher, then closes below the middle of candle 1's body
- Candle 2 does not close below candle 1's open (that would be an engulfing)
What the Dark Cloud Cover tells you
Buyers look in control as candle 2 opens higher, but sellers take back more than half of the previous green candle. At resistance, that is a warning that the rally may be ending.
How traders use it
- Enter short on the close of candle 2 or after a confirming red candle
- Place the stop above the pattern high
- Target the next support level
Common mistakes
- Counting it when candle 2 closes above the midpoint
- Shorting a strong uptrend with no resistance nearby
- No stop-loss
See it on a real chart · EP 01Candlestick Patterns for BeginnersWatch the free lesson →
Questions about the Dark Cloud Cover
What does dark cloud cover mean?
It is a bearish two-candle reversal: after a strong green candle, sellers push price back below the middle of that candle.
Dark cloud cover vs bearish engulfing?
A bearish engulfing covers the whole green body. Dark cloud cover only takes back more than half of it, so it is slightly weaker.
For education only, not financial advice. The chart is an illustration of the pattern, not real market data. No pattern works every time; always use a stop-loss.