Dark Cloud Cover
A two-candle bearish reversal where a red candle opens above the prior high then closes below the midpoint of the prior green candle.
Dark cloud cover appears after an advance: a strong green candle is followed by a red candle that opens above the prior high (a gap up), then sells off to close below the midpoint of the green body. The failed gap and reversal show buyers losing control.
It's the bearish mirror of the piercing line. A close deeper into the green body — or all the way below its open, which makes it a bearish engulfing — is more bearish.
How it has actually played out
- Dark Cloud Cover: across 1,222 signals on US stocks in the last 150 days, price was lower a week later 52.2% of the time (-2.0 pts vs. an ordinary session) and lower a month later 54.7% (-3.9 pts).
Measured from the signal-day close, no stops or costs, versus every session of the same stocks over the same window. A base rate, not a prediction.
On StockSetups
Dark cloud cover is in StockSetups' bearish candlestick set, used as a caution flag on extended names rather than a short.
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