The dark cloud cover pattern is a bearish pattern that doubles as a reversal pattern:
- The stock will have gone up a bit over an extended time.
- A candlestick will show the stock going up by a sizable amount. The upper shadow might be minimal or maybe even nonexistent.
- The downward stick is about the same size, but it will move up at the start of the day. After a while, the move starts to go down. The downward part does not have to go all the way down below the value of the positive stick.
- At this juncture, the stock should start to decline.
It helps to get into a trade position when the cloud cover appears to form. You can even enter in the midway point as that last stick is forming.
