What is Dark Cloud Cover?
Bearish pattern: strong up bar then down bar opening above prior high and closing below midpoint.
Formula
Midpoint = Day 1 Open + (Day 1 Close - Day 1 Open) / 2
Indian market context (NSE)
Reference levels: Nifty 50 at 24,300, Reliance Industries at ₹1,300, Bank Nifty futures at 55,000 (lot size 30). Examples below show how Dark Cloud Cover shows up on Indian index, equity, and futures books — update to live quotes in your journal.
Nifty 50 perspective
Dark Cloud Cover Candlestick Pattern on Nifty (24,300): on the 15-minute chart, combine with session VWAP and 9:15–10:00 liquidity — index dark cloud cover candlestick pattern signals misfire on expiry Tuesdays without volume confirmation.
Reliance Industries perspective
Dark Cloud Cover Candlestick Pattern on Reliance at ₹1,300: daily vs hourly settings diverge around results and ex-dividend dates; note corporate events in journal when dark cloud cover candlestick pattern readings spike.
Bank Nifty futures perspective
Dark Cloud Cover Candlestick Pattern on Bank Nifty futures (55,000): first-hour signals differ from post-14:30 behaviour; avoid standalone entries when banking names lead the move.
How to validate
- Forward-test Dark Cloud Cover on paper or sim for two weeks after rule changes.
- Validate only on trades where Dark Cloud Cover settings matched the written playbook.
- Split results by trending vs range weeks on Nifty before trusting the signal.
- Require higher-timeframe bias agreement if that is part of your rule.
How to track in TradeLyser
- Add Dark Cloud Cover reading to trade entry notes (value + timeframe).
- Create tags: “Dark Cloud Cover aligned” / “Dark Cloud Cover ignored”.
- Monthly: filter trades by alignment tag and compare win rate and avg R.
- Screenshot chart context for mentor review on disputed trades.
Best practices
- Combine Dark Cloud Cover with higher-timeframe bias — not as a lone trigger.
- Avoid curve-fitting settings on less than three months of tagged data.
- Refresh playbook screenshots when changing Dark Cloud Cover parameters.
- Skip trading when Dark Cloud Cover conflicts with written risk limits.
Common pitfalls
- Treating Dark Cloud Cover as a guaranteed reversal signal.
- Optimising parameters on one bullish month only.
- Trading against higher-timeframe bias because Dark Cloud Cover “said so”.
- Failing to log when you overrode Dark Cloud Cover discretionally.
How to use this in TradeLyser
Log prior trend strength; dark cloud at weekly resistance separately.
Related terms
A candlestick summarises price action for a timeframe: body shows open-to-close range; wicks show extremes. Patterns are context tools, not guarantees.
Bullish engulfing: down candle then larger up body engulfing it. Bearish is inverse.
Evening star mirrors morning star at top — weakness after uptrend.
Resistance is a price area where supply has repeatedly slowed rallies. It is a zone, not a single tick — breaks need confirmation.
FAQ
Partial penetration enough?
Classic rule needs midpoint — document if you relax.
Dark cloud in bull market?
Counter-trend — smaller size or skip.
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