When is the Dark Cloud Cover confirmed?

After a rise, a candle CLOSES below the low of the two candles within 3 candles.

When is the Dark Cloud Cover invalid?

Price trades above the pattern's high before that close.

BearishReversalBeginner

Gap up, then sellers drag it back below the middle of the green candle.

Verdict: SkipBitcoin 4H: 0 trades, won —, avg trade — vs random day — (too few trades to judge). Backtest

Uptrend

Dark Cloud Cover: textbook shape, step by step

Price keeps rising.

step 1/7

Direction	Short (sell)
Entry	After a rise, a candle CLOSES below the low of the two candles within 3 candles.
Cancelled if	Price trades above the pattern's high before that close.
Target	2x the pattern, projected from the breakout

3 common mistakes

Counting a close above the midpoint: that's a weaker pattern, not dark cloud cover.
Skipping the gap: the red candle must open above the green candle's high.
Calling it dark cloud cover when it closes below the green open: that's an engulfing.

same rules every time · equal size · no fees · method

Market	Trades	Won	Avg trade	Random day
Bitcoin · 4H · 2017-2026 · too few trades to judge	0	—	—	—
US large caps (50) · 1D · 2016-2026	56	38%	−1.14%	−0.70%

Verdict: SkipLost money on average on US large caps. Bitcoin had too few signals to judge.

pattern −64%random −39%

US large caps (50) 1D: pattern −64% vs random day −39% over 56 trades

Breakout Jan 27, 2020, exit Feb 24, 2020 (target)+4.97%

Pattern lowMidpointUptrend85.85 · Dec 11, 2019Dark cloud94.13 · Jan 24, 2020Confirmed

Starbucks 1D, real candles from Dec 11, 2019

trapBreakout Mar 27, 2019, exit Apr 3, 2019 (stop)−4.56%

Pattern lowMidpointUptrend33.80 · Feb 8, 2019Dark cloud36.84 · Mar 26, 2019Confirmed

Netflix 1D, real candles from Feb 8, 2019