The Dark-cloud Cover pattern is a bearish trend reversal or top reversal pattern that appears in an uptrend and signals a potential weakness in the uptrend. It is a two-candlestick pattern and is the antithesis of the piercing pattern. As it is a bearish trend reversal pattern, the dark-cloud cover pattern is only valid if it appears in an uptrend. The first candlestick in this pattern must be a light candlestick with a large real body. The following candlestick should be a dark candlestick that opens above the high of the first candlestick but closes well into the real body of the first candlestick, signaling a change in sentiment. The pattern is more reliable if the second candlestick closes below the middle of the first candlestick, with the deeper the penetration of the second candlestick the more significant it becomes. It also becomes more significant if the two candlesticks that form the pattern are Marubozu candlesticks with no upper or lower shadows.
As with most trend reversal patterns, the dark-cloud cover pattern becomes more reliable depending on where it appears on the price chart in relation to trendlines, pivot point, and support and resistance lines, etc. A dark-cloud cover pattern at or near a trendline or a resistance line can be used as confirmation that the test of the trendline is more likely to fail. The high point of the dark-cloud cover pattern can also serve as a resistance line, and a possible location for a stop loss.
This article was taken from http://www.chart-formations.com/candlestick-patterns/dark-cloud-cover.aspx
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