How to trade with dark cloud cover chart pattern.

In the market, there are every chart pattern has its role to play in various methods. But if we talk about the dark cloud cover chart pattern it plays a crucial role in bearish momentum. Its performance on the top indicates that the market will change its direction toward the bearish side.

Most of the time sellers use this chart pattern for short selling. After the formation of this chart pattern sellers are active to take trade. If this chart pattern performs after a heavy bull run, you must avoid trading this chart pattern if the market is running a shortage of heavy bull runs.

This chart pattern plays the main role in reversing the market from top to bottom. Spouse this chart pattern has not performed on the top and you still try to take a trade on it, make sure you have a proper stop loss.

How to find dark cloud cover chart pattern

Now every trader has a question about how to find dark cloud cover chart patterns in the market. This chart pattern usually performs on a higher time frame. Traders should consider research on a higher time frame. If you are trying to find this chart pattern in the lower time frame, it may not appear on the chart.

This chart pattern has a bullish and bearish candle. Both candles show the total interval of the market. If the market has a long bull candle it’s means the market in a full bullish mood. This chart pattern two combines candle patterns.

First Candle =- In this chart pattern, the dark cloud cover has as a first big bull bar that the candle represents the market’s total control over the buyers. Buyers are pulling the market upside without tiredness.

Second Candle =- In the market, this chart pattern has another candle that candle is covers around 70% of the prior green candles. That candle is bearish, it represents the market is controlled by the sellers. The sellers are pushing the market downside.

In this chart pattern, both candlesticks are playing their main roles according to themselves. It is formed with two candlesticks the first candle represents the bullish trend immediately the red candle opens with little gap and gives a close around more than 50% of the bullish candle. That is an indication the seller is back in the market for fighting.

How to enter On dark cloud cover

It’s time to learn, how to take entries on dark cloud chart patterns. First of all, you should consider the formation of this chart pattern. In what place this chart has been performed? If it’s performed on the top of the market, we have another entry formula, if it’s performed on the resistance or pullback then we have another entry criteria.

The chart pattern is performed on the top then we should wait for confirmation the chart pattern has been completed. After completion of this chart pattern, we must check the bearish candle is covering 50% of the bullish candle.

After fulfilling this condition, we must wait for the closing of the next candle below the dark cloud cover chart pattern. We can enter on the low of a bullish candle, but it’s quite risky so we ignore this type of entry. Traders must take entry on red candle low which has to give close below the prior red candle.

If this chart pattern is also performed on the pullback, the trader must check the retracement with the help of the Fibonacci tool. According to the Fibonacci tool, this chart pattern is performed on the level 0.61 then the trader can enter the trade.

But entering on behalf of Fibonacci trader must check dark cloud cover formation. If 50% body is not covering and not opening the gap up then traders ignore that chart pattern.

What is stop-loss on dark cloud cover?

Every trader must know what is the stop loss on the dark cloud cover. Placing the stop loss on dark cloud cover is most important. If the trader doesn’t know where to exit or close the trade. The trader will not survive for a long time in the market.

The market doesn’t know about your stop loss. If you have not placed a stop loss and the market is moving to your opposite side there is the chance to wipe your account. So traders place a stop loss on that chart pattern.

You must consider about formation of the chart pattern. If the dark cloud is performed healthy you should place a stop loss on a high price that is covered by the dark cloud chart pattern. While placing a stop-loss trader should check its place with a little bit of buffering. If your stop-loss has not buffered then maybe the market hit your stop-loss and start moving back in your direction.

Stop loss is your friend who safe your capital. If you don’t use this shield you are not a pro trader. Every trader who is continuously earning money from the market they are using proper stop loss with managed risk.

How dark cloud cover is different from Bearish engulfing

Many traders are confused it looks like bearish engulfing, but your kind of information is different from this bearish chart pattern. Everyone knows about those chart patterns, these chart patterns are bearish reversal chart patterns. These chart patterns play a role in reversing the market from top to bottom side.

Bearish engulfing has two candles one is bullish and the second is bearish, the bearish candle covers a hundred per cent of the bullish candle and also breaks the high and low parior green candle. Both candles have their interpretation, in a bullish candle the market is controlled by buyers, but in a bearish candle, sellers are in form, and starting the downfall of the market.

But bearish chart pattern dark cloud cover has a different formation from bearish engulfing. It has one big bull bar and after imidate a gap up big bearish bar that covers around 50% of the bullish candle. That represents the market changing its mood on the bearish side and sellers have taken the place form buyers.