Dark Cloud: The Most Popular Candlestick Chart Pattern in the Stock Market

Dark Cloud Friends, today we will talk about a pattern that has become very rare inside the market. It is very good to trade. Friends, just as there is the night after day. In the same way, there is the night after a day in the stock market. A dark cloud pattern does that night.

This pattern looks almost like the top. Only an excellent technical analyst can spot this pattern. This is not the case with other new traders. This is a unique pattern in the market. Because this pattern forms sometimes.

dark cloud cover pattern

Every trader should watch its formation location. It mainly forms the top of the market where the trend is ending. These patterns can easily suspend the trend’s momentum in the stock market. If a trader does not know some technical analysis, then the trader may succeed in the market.

How To Do Technical Analysis Of Dark Cloud Pattern

The Dark Cloud is a bearish reversal candlestick pattern. Who Indicates the probable reversal will come? The market will go downside after they perform this pattern. Inside this, the market makes its top, falling after the top.

The market makes its torque precisely at the peak point, forming this pattern at this peak point. How does this pattern come about? Now we will discuss how this pattern will perform. In this pattern, the green candle is performed on the previous day.

The candle gives the close near its high on that day. The next day an over candle has formed, which is a slight gap up. It is close to below 50% of the green candle. This pattern is no use if even the rad candle closes slightly upwards by 50% of the green candle, and one thing is, if you don’t know anything about the market, then you should learn about it.

  • The green candle must be close to its high.
  • The Red candles must be open with a little bit of gap up.
  • The red candle gives close to 50% of the green candle.
  • Bearish candle with at least 50% retracement of the last green candle.
  • Close of the red candle down greater than fifty percent of the red candle of the previous bullish candle.

How We Can Trade It –

Now it comes to how to trade the dark cloud chart pattern. First, we must remember where this pattern has performed in this market. This pattern usually performs at the top and is resistant to the market. It and also will be performed at the end of the market.

If all of these conditions are fulfilled by the market, we will look for a selling opportunity. Friends, we must remember one thing while trading on this pattern. We do not have to take any trade until the market doesn’t break the low of this dark cloud chart pattern.

how to trade dark cloud cover

This means that as long as no candle closes below this dark cloud chart pattern, the candle’s color is red. And as soon as there is a low break of the red candle, we have to trade under the same candle’s low. And we have to put our stop loss a little bit of buffering on top of the pattern. This is a unique and useful chart pattern for every trader who trades in the stock market.

If none of the above conditions is met by the market, then we don’t have to take any trade. We have to wait for our setup. Till our set is made, we do not have to take any train; it is a golden rule for a trader to be successful. The whole market is a complete game of probability. You don’t have to trade until the market shows you clearly.

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