Introduction to Technical Analysis

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  • Petros
    December 18, 2018

    The explanation for the dark Cloud is not clear and the example given does not agree with the description, according to my student understanding.

    Can you perhaps confirm this or provide clarity?

    Thanks.

    • Sharp Trader Staff
      December 20, 2018

      According to Investopedia, “The Dark Cloud Cover is a bearish reversal candlestick pattern whereby a black candlestick opens above a white candlestick’s close and below its midpoint.” This is another way of saying that the pattern foreshadows a reversal from bullish to bearish. Their example, indeed, provides a picture of the 3rd candle (which I omitted, for better or worse), which is a bear candle whose opening is quite close to the close of the 2nd candle. I prefer to consider the continuation, since that 3rd candle will not necessarily be evident in all time frames. Let me know if this answers your query.

      • Petros
        January 7, 2019

        Thanks for the explanation. I recognise my mistake.

        Thanks.

  • Sharp Trader Staff
    January 10, 2019

    Not a mistake at all – just different approaches to a rather amorphic topic (how to define patterns that refuse to succumb to our definitions…).

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