Dark Cloud Cover |
Characteristic of Candlesticks: Reversal
Relevance of Candlesticks: Bearish
Prior Trend of Candlesticks: Bullish
Reliability of Candlesticks : 1st Grade
Confirmation of Candlesticks: Highly Reliable
Candlestick Patterns Key Reference |
Forex Chart (EURUSD)
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DESCRIPTION
Dark Cloud Cover Pattern is followed by a long bullish candlestick at the top of the uptrend followed by a gap higher on the next candlestick.
The next candlestick then reverses as a long bearish candlestick that closes more than halfway of the previous long bullish candlestick's body.
Dark Cloud Cover Pattern is an top reversal pattern which is highly reliable for sharply reversing a uptrend to an downtrend.
PATTERN RECOGNITION
1. Dark Cloud Cover Pattern can be identified by a uptrend followed by a top reversal.
2. Refering to above diagram, firstly we will see a long bullish candlestick at the top of the uptrend.
3. Finally we will see a long bearish candlestick which opening price is above previous candlestick high.
4. The long bearish candlestick closes more than halfway through the previous candlestick real body.
EXPLAINATION
When the Dark Cloud Cover Pattern is formed at the top of a uptrend with a gap followed by a top reversal is extremely powerful indication of a change in sentiment.
The first bullish candlestick indicated the bull is currently in control.
The next candlestick open higher with a gap as the bull continue to push the price higher.
Suddenly the market reverse and push the price downward towards the midpoint and closed more than halfway through the previous bullish candlestick.
The second candlestick indicate bear strength with a closing price at more than halfway through the previous candlestick's real body.
This shows that the the bear is in control and the bull is losing its strength.
The 1st grade reversal patterns are the most reliable group of reversal patterns that seldom require any confirmation.
POINT TO NOTE
For Dark Cloud Cover Pattern, the stronger the penetration into the bullish candlestick real body, the stronger the change in sentiment which is followed by a top reversal.
The ideal scenario of Dark Cloud Cover Pattern is the second bearish candlestick that pushes more than halfway through the first bullish candlestick's real body.
CANDLESTICK PATTERNS KEY REFERENCE
Irrespective of Color (Can be bullish or bearish) |
Uptrend |
Consolidation |
Downtrend |
ANTICIPATED DIRECTION OF TREND
Lighter Arrow = Lower Probability
Solid Arrow = Higher Probability
More Likely to go sideway, Less likely to rally
|
More likely to rally, Less likely to go sideways
|
More likely to go sideway, Less likely to fall
|
More likely to fall, Less likely to go sideways |
