In yesterday’s post we looked at the bullish piercing pattern. In today’s post we are looking at the bearish counterpart of the piercing pattern, namely the dark cloud cover pattern. Once again, like the piercing pattern, pay particularly close attention to the opening gap. It is key for seeing exuberant, last minute buyers, before a market capitulation.
The dark cloud cover pattern on the charts
Take a look here for a market example of what candlestick 1 and candlestick 2 from the Apple Weekly chart should look like for the dark cloud cover.
Two final words to note about both the piercing pattern and dark cloud cover patterns is that technically they have more impact when they are occurring in key support and resistance levels. Secondly, they will occur more frequently in stocks as they have a daily open and close, so are more likely to have the crucial gaps needed for the second candlestick.