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.
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.
Learn it in the Academy
This term is covered with hands-on examples and a quiz in these lessons of the interactive course.
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