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Analysis

What is Dark cloud cover?

Qora bulut (dark cloud cover)

In short

The mirror of the piercing line: after a rally, a green candle is followed by a red candle that opens above the green close and closes below the middle of the green body.

Dark cloud cover is a two-candle bearish pattern that appears after a rally — the mirror of the piercing line.

Conditions

  • Candle 1: a long green candle; the rally continues.
  • Candle 2: a red candle that opens above candle 1's close (buyers look strong at first)...
  • ...but closes below the midpoint of candle 1's body, though still above its open.

If the red candle also closes below the green candle's open, it becomes a bearish engulfing — a stronger signal.

The logic

The day starts with a new high, but buyers can't hold it: sellers erase not only the opening gain but more than half of the previous green day. The "cloud" casts a shadow over the rally.

How to use it

The signal is stronger near a resistance level and on high volume. Confirmation is the next day closing below the red candle's low. For traders already long it is often a reason to tighten stops or take partial profit. The pattern is sometimes part of a broader top such as an evening star.

Two-candle combinations
$103$105$108$110Bullish engulfingBearish engulfingBullish haramiDark cloud coverPiercing lineTweezer top

Green background — bullish hint, red — bearish. Engulfing: the second body fully covers the first. Harami: a small second body inside the first. Piercing line and dark cloud cover: the second candle closes past the middle of the first body. Tweezer top: two candles share the same high ($107.40).

Example

Illustrative: a stock is approaching a prior high around $108.

  • Day 1: open $100.00, close $108.00. Body midpoint: ($100 + $108) ÷ 2 = $104.00.
  • Day 2: open $109.00 (above day 1's close), close $103.00.

$103.00 is below the midpoint ($104.00) and above day 1's open ($100.00) — dark cloud cover. Penetration: ($108.00 − $103.00) ÷ $8.00 = 62.5%. If day 2's low is $102.40, a day 3 close below it confirms the signal.

Mistakes and tips

  • The close must be below the middle of the green body; a red candle closing above halfway is a weak signal.

  • In a strong uptrend a single dark cloud cover is often just a pause — don't short without confirmation.

  • If you consider a short, put the stop above day 2's high and size the position from that.

Frequently asked questions

How reliable is dark cloud cover?
Moderate on its own. Near resistance, on high volume and with next-day confirmation its reliability improves noticeably.
What is the difference between dark cloud cover and a bearish engulfing?
In an engulfing the red candle covers the whole green body. In dark cloud cover it only drops below the midpoint, so it is a bit weaker.

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