Pattern Detail

Bearish Dark Cloud Cover

Two-candle bearish reversal: a down candle opens above a prior up candle but closes back below the middle of its body.

A real Bearish Dark Cloud Cover on NQ daily bars, Apr 27, 2021. Price then followed through 2.9% over the next 5 bars. The bright candles are the pattern; the dimmed bars are surrounding context.
A real Bearish Dark Cloud Cover on NQ daily bars, Apr 27, 2021. Price then followed through 2.9% over the next 5 bars. The bright candles are the pattern; the dimmed bars are surrounding context.

Shown only on the markets where this pattern occurs.

Limited sample (35). Directional at best.

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How to read this

Everything here is in R, the setup's own risk. 1R is the distance from the entry (the pattern's closing price) to where it would be proven wrong — its highest high over the 2 bars that form it. So "offered 2R" means price ran twice that distance in your favor at some point before the stop. It does not assume you took profit there: a target is a strategy choice.

Room offered (≥ 1R)

42.9%

Not reliable

Offered at least 1× its risk before the stop, vs 39.7% for a random short entry (+3.2 pts).

Move size vs normal

2.36×

Realized range over the next 20 bars vs a random bar. Precedes a bigger move.

Typical room (20-bar)

1.19R

Average run in favor (capped at 3R), vs 1.04R for a random short entry.

Summary

Offered ≥1R 42.9% of the time vs 39.7% for a random short entry. The 3.2-point gap is no bigger than the ±16.2-point margin of error you would get by chance from 35 occurrences. Not a reliable edge.

Room offered, this setup vs a random short entry

Outcome This setup Random entry Edge
Offered ≥ 1R 42.9% 39.7% +3.2
Offered ≥ 2R 28.6% 27.2% +1.4
Offered ≥ 3R 20.0% 19.7% +0.3
Stopped < 1R 57.1% 59.0% -1.9
Went sideways 0.0% 1.3% -1.3

35 occurrences · 354,524 random-entry controls · 20-bar horizon

A dark cloud cover is a two-candle top. A strong up candle runs with the trend, then the next candle gaps open above it and looks bullish for a moment, before sellers take control and push the close back down into the lower half of the first candle’s body. The higher open that fails is the tell. Buyers reached for more, got rejected, and gave back most of the prior gain.

Dark cloud cover is one of the major reversal patterns in Steve Nison’s Japanese Candlestick Charting Techniques (1991), the bearish mirror of the piercing line.

How to spot it

  • The market is rising into the pattern.
  • The first candle is a strong up (green) candle.
  • The second candle gaps open above the first.
  • The second candle is a down (red) candle that closes below the midpoint of the first candle’s body.
  • It closes above the first candle’s low, so it does not fully erase the prior bar.

The dashed box on the chart above marks the 2 candles on a real occurrence, with the advance before and the move after.

The psychology

Price has been climbing, and the first candle is a strong up bar that keeps buyers firmly in control. The next session gaps open even higher, so for a moment the advance looks like it is accelerating and the bulls have everything their way. Then the session turns against them. Sellers take the candle down and close it back inside the lower half of the first candle’s body.

That failed higher open is the tell traders watch for. Buyers reached for more, got the gap they wanted, and could not hold any of it. By the close, the session has given back most of the prior up candle’s gain, which after a steady rise is the first sign that demand is thinning and sellers are willing to lean in. The deeper the close pushes into the first body, the more decisive that rejection looks. The cover is not complete, since the close holds above the first candle’s low, but control at the top is clearly slipping.

A rejection at the highs is a warning, and the figures below test how often the warning pays off.

Does it actually work?

A pattern is a setup, not a trade, so the honest question is not “did it win” but “how much room did it tend to offer before it was proven wrong.” The tabs below answer that across five futures markets (Nasdaq, S&P 500, gold, crude oil, natural gas) and seven timeframes from one minute to one day.

For each occurrence we measure the room the move offered in units of the pattern’s own risk, then set it against what a random entry on the same market would have done. When the pattern offers more room more often than chance, that shows up as a real edge. When it does not, the page says so plainly.

Read it with the sample size in view. On the faster timeframes a pattern can fire thousands of times, enough to trust. On the daily chart it is far rarer, so treat those numbers as a hint rather than a verdict. Thin samples are flagged for you on the page.

How we measured it

  • Entry is the close of the final candle of the pattern.
  • One unit of risk, 1R, is the distance from that close up to the pattern’s invalidation point: the highest high of the two candles that form it. If price trades through there, the setup is wrong.
  • We then follow the next 20 bars and record how far price ran in your favor, in multiples of that risk, before the stop was hit.
  • Every figure is set against a random entry on the same market and timeframe, so the market’s own drift is accounted for.
  • No profit target and no position sizing. Where you take profit is a strategy choice; this measures only the room the pattern tends to give.

What this page does not cover

  • Volume on the pattern’s candles.
  • Whether the pattern forms at a meaningful resistance level.
  • Pairing it with a trend filter or a confirming signal.
  • A profit target or position sizing. We use the pattern’s own invalidation point as the stop to define risk, but where you take profit, and how much you put on, are strategy decisions this page leaves to you.

Sample Bearish Dark Cloud Cover Firings (20)

Based on data through Apr 29, 2026

Time Risk (pts) Room offered Result
Jan 4, 2022, 8:30 AM CST 26.25 3.00R Ran ≥1R
Nov 1, 2021, 8:30 AM CDT 31.25 2.20R Ran ≥1R
Mar 18, 2020, 1:48 PM CDT 32.25 0.00R Stopped
May 10, 2017, 8:30 AM CDT 6.25 2.36R Ran ≥1R
Apr 11, 2014, 8:55 AM CDT 9.75 3.00R Ran ≥1R
Dec 21, 2011, 11:50 AM CST 3.5 0.07R Stopped
Oct 31, 2011, 9:40 AM CDT 5.75 1.87R Ran ≥1R
Sep 12, 2011, 9:10 AM CDT 10.75 1.77R Ran ≥1R
Sep 9, 2011, 12:00 PM CDT 6 0.13R Stopped
Jul 12, 2011, 1:20 PM CDT 4 3.00R Ran ≥1R
Oct 20, 2009, 1:20 PM CDT 2 0.63R Stopped
Apr 1, 2009, 10:45 AM CDT 2.25 0.67R Stopped
Mar 25, 2009, 8:45 AM CDT 2.5 0.00R Stopped
Mar 23, 2009, 11:00 AM CDT 2.25 0.22R Stopped
Mar 10, 2009, 11:05 AM CDT 3.75 0.60R Stopped
Mar 5, 2009, 2:15 PM CST 6.75 3.00R Ran ≥1R
Mar 5, 2009, 11:35 AM CST 1.5 3.00R Ran ≥1R
Feb 10, 2009, 11:05 AM CST 2.25 0.00R Stopped
Feb 4, 2009, 9:40 AM CST 2.75 2.91R Ran ≥1R
Jan 26, 2009, 2:10 PM CST 4.25 0.65R Stopped

Sample backtests (2)

Real backtested runs of this pattern, with commissions and slippage. Open one for the full equity curve and metrics, or backtest it yourself on your own contract and dates.

Backtest this pattern

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