The dark cloud cover pattern is a two-candle bearish reversal candlestick pattern that appears after an uptrend. A long bullish candle is followed by a bearish candle that gaps up and closes below the midpoint of the bullish candle's body, which shows sellers taking control from buyers.
Traders use the dark cloud cover candlestick to close long positions or plan short trades. The three most common entries are after a confirmation candle closes, before the breakout of a nearby support level, and on a retest of that support level after the breakout.
What Is a Dark Cloud Cover Candlestick Pattern?
A dark cloud cover candlestick pattern is a bearish reversal pattern made of two candles that forms at the top of an uptrend. It warns that the uptrend may be ending and that a downtrend could follow.
The name describes what happens on the chart. The second candle opens above the first candle, then a dark cloud moves in as sellers push price down and cover more than half of the bullish candle's body.
The pattern appears on stocks, forex, commodities and crypto charts. It is most reliable on the daily chart and higher timeframes, where each candle covers a longer period of trading.
How Does the Dark Cloud Cover Pattern Form?
A valid dark cloud cover pattern needs prior uptrend, first long bullish candle, and second gap up candle that closes below the midpoint of the first.
Prior Uptrend
The pattern is only reliable after a clear uptrend, with price making higher highs over several candles. The same two candles in a sideways market are unreliable, because there is no uptrend to reverse.
First Candle: Long Bullish Candle
The first candle is a bullish candle with a long body. The long body shows buyers were in control for the whole session and closed price near the high.
Second Candle: Gap Up and Close Below the Midpoint
The second candle is a bearish candle that gaps up, opening above the bullish candle's close. Sellers then push price down, and the bearish candle closes below the midpoint of the bullish candle's body.
To find the midpoint, add the bullish candle's open and close, then divide by two. The bearish candle's close must also stay above the bullish candle's open, because a close below that open turns the pattern into a bearish engulfing pattern.
Traders differ on the bearish candle's upper shadow, and both views are accepted. Some prefer no upper shadow, which means selling pressure was strong enough that price never traded above the open.
Others prefer an upper shadow. It shows that buyers pushed price higher after the open, and sellers then drove price back down and won the session.
What Does the Dark Cloud Cover Pattern Tell You About Market Psychology?
The dark cloud cover pattern shows a change in control from buyers to sellers over two sessions. Each stage is visible on the chart:
Bullish candle: buyers push price higher and close near the high, so the uptrend looks healthy.
Gap up: the next session opens above that close because buyers expect more gains.
Selling pressure: the higher prices attract sellers, who push price back below the open.
Close below the midpoint: sellers erase more than half of the bullish candle's gain, and traders who bought the gap up now hold losing positions.
Those buyers often sell to cut their losses. That selling adds to the pressure in the candles that follow the pattern.
What Makes a Dark Cloud Cover Pattern More Reliable?
Many dark cloud cover patterns fail and the uptrend continues. These factors raise the chance that the pattern leads to a real reversal:
Deep close into the body: a bearish candle that erases 70% of the bullish body shows more selling pressure than one that closes just below the midpoint.
Long bodies: long bodies on both candles show strong buying followed by equally strong selling.
Size of the gap up: a larger gap up that fails shows that buyers could not hold the higher prices.
Resistance level: the pattern is stronger at a major resistance level, especially when the gap up opens above resistance and the bearish candle closes back below it.
High volume: high volume on both candles shows that many traders took part in the reversal.
Higher timeframe: the daily chart and weekly chart produce fewer false signals than intraday timeframes.
Confirmation candle: a next candle that closes below the low of the bullish candle is a strong sign the reversal is underway.
Be careful when the bearish candle has a small body or is a doji, when the pattern forms in a sideways market, or when the close sits only just below the midpoint.
Important: A bearish candle that closes above the midpoint is not a dark cloud cover, however large the gap up is. |
Dark Cloud Cover vs Piercing Pattern: What's the Difference?
The piercing pattern is the bullish opposite of the dark cloud cover. It forms at the bottom of a downtrend when a long bearish candle is followed by a bullish candle that gaps down and closes above the midpoint of the bearish candle's body.
Feature | Dark Cloud Cover | Piercing Pattern |
|---|
Signal | Bearish reversal | Bullish reversal |
Prior trend | Uptrend | Downtrend |
First candle | Long bullish candle | Long bearish candle |
Second candle open | Gaps up above the first candle's close | Gaps down below the first candle's close |
Second candle close | Below the midpoint of the first candle's body | Above the midpoint of the first candle's body |
Close limit | Stays above the first candle's open | Stays below the first candle's open |
Typical trade | Close longs or enter short | Close shorts or enter long |
Stop-loss | Above the pattern high | Below the pattern low |
Searches for a dark cloud cover bullish pattern usually mean the piercing pattern, since the dark cloud cover itself is always bearish.
The bearish engulfing pattern is a close relative. Its bearish candle covers the whole body of the bullish candle, which makes it a stronger bearish signal than the dark cloud cover. The evening star is a three-candle bearish reversal pattern with a small candle between the bullish candle and the bearish candle.
How Do You Trade the Dark Cloud Cover Pattern?
The dark cloud cover pattern is an early warning, so a trading plan built on it relies on confirmation and a defined stop-loss.
Wait for Confirmation
Wait for the candle after the pattern to close before acting. A confirmation candle that closes lower, a breakout below a nearby support level, or a close below a short-term moving average such as the 20-EMA all count as confirmation.
Some traders also check the RSI for bearish divergence, where price makes a higher high while the RSI makes a lower high.
Entry
Confirmation entry: enter short when the confirmation candle closes.
Aggressive entry: enter short before the breakout of the nearest support level. The price is better, and the chance of a false signal is higher.
Conservative entry: wait for the breakout below the support level, then enter when price retests that level from below. Fewer trades trigger, and each one has more confirmation behind it.
Traders who are already long can use the same confirmation to take profits or close the position.
Stop-Loss Placement
Place the stop-loss above the high of the bearish candle, which is the pattern high. If price trades back above that high, sellers have lost control and the pattern has failed.
Leave a small buffer above the high to allow for spread and slippage. Around major news releases, price can jump past a stop-loss level and fill at a worse price.
Profit Targets
Common targets are the nearest support level, the previous swing low, or a fixed risk-reward ratio such as 1:2 or 1:3. Many traders close part of the position at the first target and move the stop-loss to break-even on the rest.
Pro Tip: Set position size from the stop-loss distance first, because weekly and daily patterns often need a much wider stop-loss than intraday trades. |
Dark Cloud Cover Pattern Example
The BTC/USDT weekly chart from late September to November 2025 shows a dark cloud cover pattern at the top of a strong uptrend. The entry and target prices below are approximate readings from the chart.
Bitcoin rose from about 74,500 in April 2025 to above 120,000 by October 2025. The 108,736 level capped price in mid-2025, then became the support level during the final part of the uptrend.
Candle | Open | High | Low | Close |
|---|
Bullish candle (week of 29 Sep 2025) | 111,522 | 125,659 | 111,141 | 123,389 |
Bearish candle (week of 6 Oct 2025) | 123,595 | 126,175 | 102,028 | 114,927 |
Checking each condition:
Midpoint: (111,522 + 123,389) ÷ 2 = 117,455.5.
Gap up: the bearish candle opened at 123,595, which is 206 above the bullish close of 123,389. The gap is small because crypto trades 24/7, so each weekly candle opens close to the previous close.
Close below the midpoint: 114,927 closed 2,528.5 below 117,455.5, erasing about 71% of the bullish body.
Close limit: 114,927 stayed above the bullish open of 111,522, so the pattern is a dark cloud cover and not a bearish engulfing pattern.
Upper shadow: price reached 126,175 before sellers took control, so buyers tried for a new high and failed.
With the stop-loss above the pattern high of 126,175, the two entries on the chart carry different risk. The first target is the June 2025 swing low near 98,000, and the second is the April 2025 swing low near 74,500.
Entry | Entry price | Risk to stop-loss | Reward to 98,000 | Reward to 74,500 |
|---|
Aggressive (before breakout) | ~111,000 | 15,175 | 13,000 (1:0.9 risk-reward) | 36,500 (1:2.4 risk-reward) |
Conservative (retest after breakout) | ~105,500 | 20,675 | 7,500 (1:0.4 risk-reward) | 31,000 (1:1.5 risk-reward) |
Price made a breakout below 108,736 in early November 2025, passed 98,000 within weeks and traded near 80,600 by late November. It went on to trade near 60,000 by February 2026, which reached both targets.
The conservative entry had more confirmation, with a wider stop-loss distance and a lower reward at each target. At the first target, neither entry offered a 1:1 risk-reward ratio, so the trade only made sense with the deeper target or a smaller position size.
What Are the Advantages and Disadvantages of the Dark Cloud Cover Pattern?
Advantages | Disadvantages |
|---|
Easy to spot: two candles and a clear midpoint rule make the pattern simple to identify, even for beginners | False signals: without a confirmation candle, many patterns fail and the uptrend continues |
Early warning: flags weakening buying pressure before a downtrend is visible | Weak in volatile markets: sudden price swings and sideways markets make the pattern unreliable |
Clear stop-loss: the pattern high gives a defined stop-loss level | Lagging: by the time the confirmation candle closes, price has already fallen part of the way |
Risk management: warns traders who are long to take profits or tighten the stop-loss | Fails in strong uptrends: strong buying can outweigh the selling and push price to new highs |
Works with other tools: combines well with support and resistance levels, volume and the RSI | News risk: news-driven gaps can create the pattern without a real change in control |
The dark cloud cover pattern works best as one part of a trading plan, alongside a resistance level, volume and a confirmation candle.
FAQ
Is the dark cloud cover bullish or bearish?
The dark cloud cover is bearish. It forms after an uptrend and signals a possible reversal to the downside, while its bullish opposite, which forms after a downtrend, is the piercing pattern.
How reliable is the dark cloud cover pattern?
The dark cloud cover pattern is moderately reliable and weaker than the bearish engulfing pattern. It becomes more reliable on the daily chart or higher, near a resistance level, with high volume and after a confirmation candle.
Does the second candle have to gap above the previous high?
The bearish candle needs to open above the bullish candle's close. Some traders use a stricter rule that requires an open above the bullish candle's high, which produces fewer patterns.
Check More Bearish Candlestick Patterns
Bearish Pattern | Features |
|---|
Hanging Man Pattern | The hanging man is a single-candle bearish reversal pattern that forms at the top of an uptrend. 1. The candle has a small body at the top of its range. 2. The lower shadow is at least twice the length of the body. 3. The candle has little or no upper shadow. |
Shooting Star Pattern | The shooting star is a single-candle bearish reversal pattern that forms after an uptrend. 1. The candle has a small body at the bottom of its range. 2. The upper shadow is at least twice the length of the body. 3. The candle has little or no lower shadow. |
Bearish Engulfing Pattern | The bearish engulfing is a two-candle bearish reversal pattern that forms after an uptrend. 1. The first candle is a small bullish candle. 2. The second candle is a larger bearish candle with a body that completely engulfs the body of the first candle. |
Bearish Harami Pattern | The bearish harami is a two-candle bearish reversal pattern that forms after an uptrend. 1. The first candle is a large bullish candle. 2. The second candle is a small candle, usually bearish, with a body that sits completely inside the body of the first candle. |
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Tweezer Top Pattern | The tweezer top is a two-candle bearish reversal pattern that forms at the end of an uptrend. 1. The first candle is a bullish candle. 2. The second candle is a bearish candle. 3. Both candles have the same, or nearly the same, high. |
Evening Star Pattern | The evening star is a three-candle bearish reversal pattern that forms after an uptrend. 1. The first candle is a long bullish candle. 2. The second candle is a small-bodied candle that can be bullish or bearish. 3. The third candle is a long bearish candle that closes below the midpoint (50%) of the first candle body. |
Three Black Crows Pattern | Three black crows is a three-candle bearish reversal pattern that forms after an uptrend. 1. Three long bearish candles with small shadows form in a row. 2. Each candle opens inside the body of the previous candle. 3. Each candle closes lower than the previous candle. |
Check More Bullish Candlestick Patterns
Bullish Pattern | Features |
|---|
Hammer Pattern | The hammer is a single-candle bullish reversal pattern that forms after a downtrend. 1. The candle has a small body at the top of its range. 2. The lower shadow is at least twice the length of the body. 3. The candle has little or no upper shadow. |
Inverted Hammer Pattern | The inverted hammer is a single-candle bullish reversal pattern that forms after a downtrend. 1. The candle has a small body at the bottom of its range. 2. The upper shadow is at least twice the length of the body. 3. The candle has little or no lower shadow. |
Dragonfly Doji Pattern | The dragonfly doji is a single-candle bullish reversal pattern that forms at the bottom of a downtrend. 1. The open and close are at or near the high of the candle. 2. The candle has a long lower shadow. 3. The candle has little or no upper shadow. |
Bullish Engulfing Pattern | The bullish engulfing is a two-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a small bearish candle. 2. The second candle is a larger bullish candle with a body that completely engulfs the body of the first candle. |
Bullish Harami Pattern | The bullish harami is a two-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a large bearish candle. 2. The second candle is a small candle, usually bullish, with a body that sits completely inside the body of the first candle. |
Piercing Line Pattern | The piercing line is a two-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a long bearish candle. 2. The second candle is a bullish candle that opens below the close of the first candle. 3. The second candle closes above the midpoint (50%) of the first candle body. |
Bullish Kicker Pattern | The bullish kicker is a two-candle bullish reversal pattern that shows a sudden change from selling to buying. 1. The first candle is a bearish candle. 2. The second candle is a bullish candle that gaps up and opens at or above the open of the first candle. 3. The bodies of the two candles do not overlap. |
Tweezer Bottom Pattern | The tweezer bottom is a two-candle bullish reversal pattern that forms at the end of a downtrend. 1. The first candle is a bearish candle. 2. The second candle is a bullish candle. 3. Both candles have the same, or nearly the same, low. |
Morning Star Pattern | The morning star is a three-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a long bearish candle. 2. The second candle is a small-bodied candle that can be bullish or bearish. 3. The third candle is a long bullish candle that closes above the midpoint (50%) of the first candle body. |
Bullish Abandoned Baby Pattern | The bullish abandoned baby is a three-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a long bearish candle. 2. The second candle is a doji that gaps down below the first candle. 3. The third candle is a long bullish candle that gaps up above the doji. |
Three White Soldiers Pattern | Three white soldiers is a three-candle bullish reversal pattern that forms after a downtrend. 1. Three long bullish candles with small shadows form in a row. 2. Each candle opens inside the body of the previous candle. 3. Each candle closes higher than the previous candle. |
Three Inside Up Pattern | The three inside up is a three-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a large bearish candle. 2. The second candle is a small bullish candle that stays inside the first candle body and closes above the midpoint (50%) of the first candle body. 3. The third candle is a bullish candle that closes above the open of the first candle. |
Three Outside Up Pattern | The three outside up is a three-candle bullish reversal pattern that forms after a downtrend. 1. The first candle is a bearish candle. 2. The second candle is a bullish candle with a body that completely engulfs the body of the first candle. 3. The third candle is a bullish candle that closes above the close of the second candle. |
Check More Neutral Candlestick Patterns
Neutral Pattern | Features |
|---|
Doji Pattern | The doji is a single candle that opens and closes at or near the same price, which shows indecision between buyers and sellers. 1. The body is very small or appears as a thin line. 2. The upper and lower shadows can be any length. 3. A doji after a strong trend can warn of a reversal, and traders wait for the next candle to confirm the reversal. |
Pin Bar Pattern | The pin bar is a single-candle reversal pattern that can be bullish or bearish. 1. The candle has a small body at one end of its range. 2. One long shadow, called the tail, makes up most of the candle range. 3. A bullish pin bar has a long lower shadow, and a bearish pin bar has a long upper shadow. |
Marubozu Pattern | The marubozu is a single candle with a long body that shows strong buying or strong selling. 1. The candle has a long body. 2. The candle has no upper or lower shadow, or only very small shadows. 3. A bullish marubozu opens at the low and closes at the high, and a bearish marubozu opens at the high and closes at the low. |
Harami Pattern | The harami is a two-candle reversal pattern that can be bullish or bearish. 1. The first candle is a large candle. 2. The second candle is a small candle with a body that sits completely inside the body of the first candle. 3. A bullish harami forms after a downtrend, and a bearish harami forms after an uptrend. |
Engulfing Pattern | The engulfing is a two-candle reversal pattern that can be bullish or bearish. 1. The first candle is a small candle. 2. The second candle is a larger candle of the opposite colour, with a body that completely engulfs the body of the first candle. 3. A bullish engulfing forms after a downtrend, and a bearish engulfing forms after an uptrend. |
Inside Bar Pattern | The inside bar is a two-candle pattern that can signal a continuation or a reversal. 1. The first candle is a large candle, often called the mother bar. 2. The second candle has a high and low that stay inside the high and low of the first candle. 3. Traders trade the breakout above the high or below the low of the first candle. |
Morning Star and Evening Star Pattern | The morning star and evening star are three-candle reversal patterns, one bullish and one bearish. 1. The first candle is a long candle in the direction of the existing trend. 2. The second candle is a small-bodied candle that can be bullish or bearish. 3. The third candle is a long candle in the opposite direction that closes past the midpoint (50%) of the first candle body. 4. A morning star forms after a downtrend, and an evening star forms after an uptrend. |
