The dark cloud cover candlestick pattern is a bearish two candle reversal pattern that appears at the top of a prevailing uptrend.
The first candle is a long full bodied bullish candle, signaling the progression of the current trend.
The second candle is the most important, and signifies a potential reversal.
The second candlestick’s open should gap up above the close of the first candle. This candle then proceeds to move lower and close below the halfway point of the first bullish candle.
It’s also important that the second candlestick close above the open of the first candle within the body, so there is a narrow window of opportunity where the second candles close signals a valid dark cloud cover pattern.
The opposite of this pattern is its bullish counterpart, the Piercing Line pattern.