Dark Cloud Cover Candlestick

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Definition of 'Dark Cloud Cover Candlestick'

A dark cloud cover is a candlestick chart pattern that signals the start of a bear move to the downside. It looks like this.

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Dark Cloud Cover candlestick pattern.

Note that the candlestick that makes up the dark cloud cover must:
  • Have an opening price above the closing price (i.e. must be a red or black candle).
  • Have a closing price that is inside the range of the previous day and be below the mid-point of the open and close of the previous day.
  • Have an opening price above the high of the previous day (i.e. an extreme gap open).

A dark cloud cover pattern starts off with what looks like the bullish trend is going to continue by starting the candle with an extreme gap open and then usually a move up but when the bulls give up and the bears take over the candle ends up red with a close below the mid-point of the previous day's high and low. This is the indication that the bull run is over and a bearish down move might be starting.

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