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Dark Cloud Cover

Discussion in 'Traders Glossary' started by GlossaryEditor, Aug 15, 2015.

  1. GlossaryEditor

    GlossaryEditor Glossary Editor

    Feb 1, 2013
    Likes Received:
    Dark Cloud Cover is a term for a strong up candle with obvious price-increasing price-action. Due to market upside momentum, the next trading period ( a black candle) opens above the highs of the prior white candle. But then, bearish pressure totally overcomes the bullish move and negates all the bull’s work to push prices higher. The perfect Dark Cloud Cover assumes that the closing price of the black candle should be below the middle of the white candle. The open price of the black candle should be above the highs of white candle, as in the picture. This pattern would be treated as confirmed if the market forms next a black candle of even smaller size.

    This is a bearish reversal pattern and usually it appears after some upside move, on tops, or under resistance levels.

    For more information and illustrations, please see the Dark Cloud Cover entry in the FPA's Forex Encyclopedia.
    fxerich likes this.





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