Dark Cloud Cover
Dark Cloud Cover is a technical analysis pattern used to identify potential reversals in the price of a security. It is a bearish reversal pattern that is formed when a black candlestick follows a long white candlestick. The black candlestick should open above the close of the previous white candlestick and close below the midpoint of the previous white candlestick. This pattern is considered a strong indication that the current uptrend is about to reverse.
History of Dark Cloud Cover
The Dark Cloud Cover pattern was first described by Japanese analyst Goichi Hosoda in the 1930s. He called it the “Kumo” pattern, which translates to “cloud” in English. The pattern was later popularized by Steve Nison in his book, “Japanese Candlestick Charting Techniques.” The Dark Cloud Cover pattern is one of the most reliable bearish reversal patterns in technical analysis.
Comparison Table
| Pattern | Reliability |
|---|---|
| Dark Cloud Cover | High |
| Head and Shoulders | Medium |
| Double Top | Low |
Summary
The Dark Cloud Cover pattern is a reliable bearish reversal pattern that is used to identify potential reversals in the price of a security. It is formed when a black candlestick follows a long white candlestick and is considered a strong indication that the current uptrend is about to reverse. For more information about this pattern, you can visit Investopedia, TradingView, and StockCharts.
See Also
- Bullish Engulfing Pattern
- Bearish Engulfing Pattern
- Harami Pattern
- Doji Pattern
- Gravestone Doji Pattern
- Hammer Pattern
- Hanging Man Pattern
- Inverted Hammer Pattern
- Shooting Star Pattern
- Tweezer Tops/Bottoms Pattern
