Dark cloud cover

Dark cloud cover is a bearish reversal pattern built from two candles that appears at the top of an uptrend on a candlestick chart. The first candle is a strong green candle continuing the existing rally. The second candle opens above the prior candle's close, pushing to a new high, but then sellers take over and the price closes well down into the body of the first candle, ideally more than halfway.

The pattern's name comes from the visual effect of the second candle's dark body appearing to sink down over the top of the first, like a dark cloud spreading over what had looked like a clear uptrend. The gap up open followed by a sharp reversal lower is read as a sign that buyers pushed the stock to a fresh high, ran out of momentum, and were then overwhelmed by sellers within the same session, a meaningful shift in control after a period where buyers had faced little pushback.

Traders treat dark cloud cover as a warning that an uptrend may be losing steam, particularly when it appears after an extended rally or right at a level like a prior high or resistance zone. As with most patterns built from one or two candles, it is generally treated as a caution flag to watch for confirmation over the following sessions rather than an automatic sell signal on its own, since an isolated candle pattern can still be overridden by continued buying pressure.