Dark Cloud Cover
Two-candle bearish reversal: a bullish candle followed by a bearish candle that opens above the prior high and closes below the midpoint of the first body.
The Dark Cloud Cover is the bearish mirror of the Piercing Line. The first candle is a long bullish candle at the top of an uptrend. The second candle gaps up above the prior close (initially bullish continuation), then closes below the midpoint of the first candle's body.
Buyers get an early head-fake — the gap-up open looks like strength — but sellers take over and drive price deep into the prior green candle. The more the second candle penetrates the first (closing well below 50%), the more aggressive the selling. Confirmed with a bearish session the following day.
Example
A stock making new highs gaps up at the open, appearing ready to extend the rally. By the close, sellers have erased the gap and pushed the close below the midpoint of the prior day's big green candle. Volume surges — distribution day.
Related Terms
Bearish Engulfing
A large bearish candle that completely wraps the prior bullish candle's body — supply takes control — a reversal warning at the top of an uptrend.
BeginnerCounterattack Line
Two opposite-coloured candles that close at the same price — bulls and bears fought to a draw — a potential reversal warning.
IntermediateEvening Star
A three-candle bearish reversal: a long bullish candle, a small indecision candle gapping higher, then a large bearish candle reclaiming the midpoint.
BeginnerPiercing Line
Two-candle bullish reversal: a bearish candle followed by a bullish candle that opens below the prior low and closes above the midpoint of the first body.
BeginnerShooting Star
A small body near the bottom with a long upper wick at the top of an uptrend — buyers were rejected at the high — a bearish reversal warning.
BeginnerTweezer Top
Two consecutive candles with matching highs at the top of an uptrend — the shared high was rejected twice, hinting at a ceiling.
Beginner