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The dark cloud cover is a bearish candlestick pattern in technical analysis that signals a potential reversal in an uptrend. It occurs when a long bullish candlestick is followed by a long bearish candlestick that opens above the previous day’s close but closes below the midpoint of the prior candlestick. This pattern suggests that sellers have overtaken buyers, potentially leading to a downward price movement.
A trader notices a dark cloud cover pattern forming on the chart of a stock that has been in an uptrend, indicating that the trend may reverse, prompting the trader to consider selling.
• Dark cloud cover is a bearish reversal candlestick pattern in technical analysis.
• It occurs when a bullish candlestick is followed by a bearish candlestick that closes below the midpoint of the previous candlestick.
• The pattern indicates selling pressure and a potential trend reversal.
It indicates a potential reversal from an uptrend to a downtrend, as sellers overpower buyers.
It forms when a bearish candlestick opens above the previous bullish candlestick’s close and closes below its midpoint.
Traders may consider selling or taking short positions, as the pattern signals a potential bearish reversal.
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