Dark Cloud Cover is a two-candle bearish reversal candlestick pattern found in an uptrend. The first candle is green and has a larger than average body. The second candle is red and opens above the high of the prior candle, creating a gap, and then closes below the midpoint of the first candle.
The pattern shows a possible shift in the momentum from the upside to the downside, indicating that a reversal might happen soon.
The bullish version of the Dark Cloud Cover pattern is the Piercing candlestick pattern.
Traditionally, this candlestick pattern is recognized in conjunction with a specific trend direction, i.e. it might be important for the pattern if the price has been generally going up or down. The ‘Detect Trend Based On’ option allows you to specify which of the following methods to use to detect the trend:
By comparing two different SMAs, the 'SMA50, SMA200' option only detects stronger trends. When the trend is weak and the condition above is not met, no patterns will be detected. In contrast, the 'SMA50' option will also detect weaker trends.