Dark Cloud Cover Pattern on a Live Gold Chart

What it shows

Each one gets a red label marked DCC over the high of the second candle.

How Pravex works it out

1. What counts as long or small for the dark cloud cover moves with the market, since the yardstick is a 14-candle exponential average of body sizes, where a body is the distance from open to close, so a quiet stretch lowers it and a busy one raises it.
2. The dark cloud cover starts with a rising candle (close above open) whose body is long, above the average.
3. The second candle must be falling and open above the first candle’s high, a gap up. It has to close below the middle of the first body, (open + close) ÷ 2, but still above the first candle’s open. A close at or below the first open does not count.
4. For the dark cloud cover, the trend test runs on the first candle, which by default has to close above its 50-candle simple moving average to count as an uptrend; on the first 49 candles, where the average can’t be measured yet, nothing is marked.
5. Example numbers, not a live price: the first candle rises from 2,030 to 2,042 with a high of 2,043. The second opens at 2,044 and closes at 2,034. The first body’s middle is 2,036, so the close at 2,034 is below it and above 2,030.

Settings

Setting	Default	What changing it does
Trend check	SMA50	How the uptrend before the dark cloud cover is measured on the first candle: SMA50 compares its close with the 50-candle simple average. The choice that adds SMA200 also needs the 50-candle average above the 200-candle one, so fewer dark cloud cover labels appear, and the last choice turns the check off.
Label colour	Red (#F23645)	Colours the DCC label that sits over the high of the candle completing the dark cloud cover, with the DCC letters always in white.

How traders read it

The second candle starts with a show of strength, a gap above the high, and turns it into a loss deep into the first candle. The deeper the close goes into the first body, the stronger the reading. A close just under the middle is the weakest version.

The usual stop is above the second candle’s high, the top of the failed gap. Confirmation comes from the next candle: a further close lower supports the turn, while a close back above the first candle’s close says the buyers absorbed it.

When it misleads

The gap is the hard part on gold. Spot gold trades nearly around the clock, so a candle rarely opens above the previous high except where trading resumes after a pause, such as the weekly open. Expect few labels, and most of them at those reopens, where the gap says more about the weekend than about the trend. One close above the 50-candle average is enough for our uptrend test. Wait for the close before trusting a dark cloud cover label on the latest candle, which is checked on each update and can lose its label.

Questions and answers

What is a dark cloud cover pattern?

Two candles after a rise: a long rising candle, then a falling candle that opens above its high and closes below the middle of its body, but above its open.

Why does Pravex find so few on gold?

The second candle has to open above the first candle’s high. A market that trades almost without breaks rarely gaps like that, so the pattern is rare on spot gold.

What is the difference between dark cloud cover and bearish engulfing?

In dark cloud cover the second candle closes inside the first body, below its middle. In a bearish engulfing it closes at or below the first candle’s open, and in Pravex the engulfing’s first candle is small while dark cloud cover’s is long.

Which pattern is the bullish mirror of dark cloud cover?

The piercing pattern: after a long falling candle, a rising one opens below its low and closes above the middle of its body.

Related: Piercing - Bullish, Engulfing - Bearish, Evening Star - Bearish, All Candlestick Patterns, every indicator.