Thursday, June 23, 2016

What is Dark Cloud Cover: Bearish Reversal Pattern?

What is Dark Cloud Cover: Bearish Reversal Pattern?


Dark Cloud Cover is a bearish reversal pattern. It appears in an uptrend. This pattern is comprised of 2 candles. First candle is a long white one, accompanied with heavy volume. Next day's candle opens above the previous day's high. But it closes below the mid-point of the first candle. However, the closing of second candle is not below the opening level of white candle.

Strategy: Short positions can be created once the low of the first candle is exceeded. Stop loss can be placed above the high of second candle.