Dark Cloud Cover Candlesticks
When a Dark Cloud Cover formation occurs the rain falls thus the saying hints at what occurs. A "Dark Cloud Formation" is a sign that a higher probability of an upward trend reversal is about to happen and prices fall.
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This is a strong bullish reversal pattern that has high reliability.
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Characteristics
1. For Dark Cloud Cover to appear can uptrend must be happening.
2. A Green Candlestick is followed by a Red Candlestick that opens above the Real Body of the Green Candlestick and closes below halfway down the previous Green Candlestick.
3. The lower the Red Candlestick closes below the 50% mark of the Green Candlestick the greater the probability of a trend reversal.
Important!
Dark Cloud Formation is not a valid pattern in a
sideways trend or downward trend.
Confirmation
Confirmation can be another red candlestick coming in.
Trading Psychology
1. Dark Cloud cover shows a change has taken place in the upward momentum.
2. Dark Cloud Formations encourage a lot of the Bull day traders to get out and a lot of the Bear day traders to jump in. Only very experienced day traders should flip flop there position.
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