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Showing posts with the label opposite-of-dark-cloud-cover

DARK CLOUD COVER CANDLESTICK PATTERN

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Dark Cloud Cover Candlestick 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 …

PIERCING CANDLESTICK PATTERN

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PIERCING CANDLESTICK PATTERN The bullish counterpart to the dark cloud cover is the “piercing pattern.” The first thing to look for is to spot the piercing pattern in an existing downtrend, which consists of a long red candlestick followed by a gap lower open during the next session, but which closes at least halfway into the prior black candlestick’s real body.

                                  The Piercing Pattern is composed of a two-candle formation in a down trending market. With daily candles, the piercing pattern will often end a minor downtrend (a downtrend that lasts between six and fifteen trading days). The day before the piercing candle appears, the daily candle should have a fairly large dark real body, signifying a strong down day.

Criteria 1. The downtrend has been evident for a good period.
2. The body of the first candle is red; the body of the second candle is green.
3. A long red candle occurs at the end of the trend.
4. The green candle closes more than halfway up …