The Dark Cloud Cover candlestick pattern is a bearish reversal signal that often appears at the top of an uptrend in forex trading. It is a two-candle formation that reflects a shift in market sentiment from bullish to bearish. The first candle is a strong bullish candle with a large body, showing buyers in control. The second candle opens above the previous close, creating a gap up, but then closes deep into the body of the first candle. This sudden reversal indicates that sellers have taken over and are pushing prices lower.

For the pattern to be valid, the second candle should close at least halfway into the body of the first candle. The deeper the close, the stronger the bearish signal. Traders often look for confirmation on the following candles, such as continued bearish movement or increased volume, before acting on the signal.

Dark Cloud Cover is most effective when it appears after a clear uptrend or at a resistance level, as it suggests the trend may be weakening. However, like all candlestick patterns, it should not be used in isolation. Combining it with technical indicators such as RSI, moving averages, or support and resistance analysis can improve accuracy. It helps traders anticipate potential reversals and manage risk effectively.

The dark cloud cover is a bearish reversal candlestick pattern that signals a potential shift from an uptrend to a downtrend. It forms over two days: the first is a strong bullish (green/white) candle, confirming the existing uptrend. The second day opens with a gap up, creating a new high, but then closes significantly lower, well into the body of the prior day’s candle (typically more than 50%).

This pattern indicates that buyers initially pushed the price higher at the open, but sellers aggressively took control, driving the cost down and eroding the gains made the previous day. This failure to hold new highs suggests weakening bullish momentum. Traders often view it as a signal to exit long positions or consider entering short trades, especially if confirmed by subsequent bearish price action.