CDLDARKCLOUDCOVER (CDLDARKCLOUDCOVER)

CDLDARKCLOUDCOVER (Dark Cloud Cover) is a two-candle bearish reversal pattern appearing at trend tops. The pattern consists of: First candle is a strong bullish candle continuing the uptrend. Second candle opens above the first candle's high (gap up showing initial strength) but then reverses and closes deep into the first candle's body. The penetration parameter (default 0.5 or 50%) determines how far into the first candle the second must close - deeper penetration creates stronger signals. The pattern shows bulls attempting to push higher with a gap up, but bears aggressively selling and pushing price back down, creating a 'dark cloud' over the previous bullish candle. Classic interpretation requires >50% penetration.

Dark Cloud Cover is one of the most popular and reliable bearish reversal patterns in cryptocurrency technical analysis. The failed gap-up followed by aggressive selling indicates bulls are losing control and bears are taking over. Enter short positions when the second candle closes, especially if penetration exceeds 50% and reaches 60-70%. Stronger signals occur when the second candle closes below the first candle's midpoint. Wait for next candle confirmation (close below Dark Cloud's low) for conservative entry. The pattern is most effective at resistance levels, after extended rallies, or at psychological price points. Combine with RSI overbought (>70), MACD showing bearish divergence or crossover, volume increasing on the dark cloud candle, and overhead resistance zones. Very popular pattern frequently discussed in crypto trading communities.