Welcome to Lesson 7 of the Candlestick Signals series by PROP365. In this video, we break down the dark cloud cover pattern and how to spot bearish reversals using this two-candle formation.

What Is a Dark Cloud Cover Pattern?

The dark cloud cover pattern is a bearish reversal signal that appears after an uptrend. It consists of two candlesticks:

• A long bullish candlestick
• A long bearish candlestick that opens above the previous high and closes below the midpoint of the bullish candle

Dark Cloud Cover Formation

• Session one: Bulls control the market, pushing the price higher. The candle closes near its high.
• Session two: Bears take over. The candle opens higher (gap up) but closes well below the midpoint of the previous bullish candle.
• The pattern becomes more powerful if the bearish candle closes deeper into the body of the first candle.

This formation reflects a shift in market sentiment, where bullish strength is overtaken by a sudden and forceful bearish response. Both candlesticks should have long real bodies to confirm conviction from both sides.