Dark cloud cover is the mirror of the piercing line — a two-candle bearish reversal at the top. A long green candle prints in an uptrend. The next bar opens above that green close (often gapping up) and then sells back through more than half of the green body before closing red. Buyers tried for new highs and got slapped down on the same bar.
The setup looks like continuation: a strong green candle, then a gap-up open the next session. That's the shape of a market that wants to keep going up. Then sellers show up, absorb the gap, and push price back through more than half the prior bar's gains. By the close, most of yesterday's rally is gone.
How deep into candle 1's body the close sells back is the conviction signal. A close at the midpoint is the canonical version. A close back below candle 1's open turns dark cloud cover into a bearish engulfing — strictly stronger.
Where the pattern forms matters. After a sustained rally into a known resistance level, dark cloud cover is a real signal. In chop or after a single up bar, it's noise.
Thesis fires the dark-cloud-cover detector on every 1-hour close, runs the candidate through a deterministic pre-filter (RSI, trend confirmation, fee math), and then through an AI reasoning pass with the full context — recent price action, indicators, support and resistance, news sentiment, market regime — before any short order gets placed.
The two-candle structure means the pattern can form on a gap that was caused by news. The AI layer's news awareness helps catch those traps before they trigger trades. See how the AI layer works.
Free practice mode lets you see live dark-cloud-cover detections before connecting a broker.
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