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Bearish Dark Cloud Cover
Bearish Dark Cloud Cover
This is a top reversal pattern with two candlesticks. A white candlestick appears on the first day while an uptrend is in progress.
The second day opens at a new high, with a gap up and closes more than halfway into the prior white body, leading to the formation of a strong black candlestick.
How to identify
1st day is a long white day.
2nd day is a red day which opens above the 1st day’s high.
2nd day closes within the 1st day, but below the midpoint.
Psychology
A long white candlestick is formed on the 1st day and a gap up is created on the 2nd day. This is encouraging to the bulls.
However, the 2nd day closes below the midpoint of the 1st day. Longs quickly question their strategy.
