Dark Cloud Cover

Dark Cloud Cover for NT8

The Dark Cloud Cover is a two bar may pattern that may indicate a shift in momentum to the downside.It is composed by an up-close followed by a down-close. Accordingly, the second bearish candle is the basis for the pattern name, forming a “dark cloud” over the preceding bullish candle.

What is a Dark Could Cover Pattern

Both bullish and bearish candles are above average when compared to the bars in the lookback period. Also, the second bar has a close below the midpoint of the first candle’s body. Finally, the second bar should close above the open (body high) of the first candle.

When identified as a reversal, a Dark Cloud Cover pattern will occur during a minor bullish swing trend. The minimum swing trend deviation requirement is user selectable via the indicator dialogue box. Likewise, the definition of the large body bar requirement may be defined as per user preference. The bullish equivalent of this pattern is the Bullish Piercing pattern.

As with other reversal setups, the statistical probability may improve when combined with trend analysis or momentum oscillators. More information on combining other technical indicators with candlestick patterns in this post.

Other bearish candlestick patterns

Other bearish candlestick patterns include the bearish belthold, bearish engulfing, bearish harami, bearish harami cross, black marubozu, gravestone doji, hanging man, evening star, evening doji star, long black candle, shooting star, tweezers top, three black crows and the falling three methods.

The Dark Cloud Cover and the above patterns may be identified with our candlestick pattern indicator for NinjaTrader 8. Check out the LizardIndicators Premium Section for more information.