Dark Cloud Cover

Anatomy

The first candle is a strong green body. The second opens with a gap up (or above the prior close) but sells off to close more than halfway down into the prior green body — without fully engulfing it.

Market psychology

Buyers looked in control at the open, but sellers reversed the session and erased most of the prior advance. Closing below the midpoint shows sellers won the session, though not as decisively as a full engulfing.

When it matters

Meaningful after an uptrend, ideally at resistance. It is the bearish counterpart of the piercing line and a slightly weaker cousin of the bearish engulfing — the deeper the close into the first body, the stronger.

Common beginner mistakes

• Accepting a close above the prior midpoint — if the red candle does not close past the 50% mark, it is not a valid dark cloud cover.
• Confusing it with a bearish engulfing; the dark cloud closes inside the prior body, the engulfing closes beyond it.

Frequently asked questions

How far must a dark cloud cover close into the prior candle?

More than halfway down (below the 50% midpoint of the prior green body). A close above that is too weak; a close below the prior open would make it a full bearish engulfing instead.

Is dark cloud cover reliable?

It is a respected two-candle top when it appears at resistance after an uptrend, especially with the gap-up open and rising volume on the red candle. In a flat range it is unreliable.