What is a Dark could cover pattern? A Dark cloud cover pattern happens once a red bearish candlestick (close price below open price) on day two closes below the middle of day one bullish candlestick (close price higher than open price). we are going to be exploitation this pattern to sell rallies during a bearish currency market.
Dark Cloud Cover Setup
Indicators: 100 Period Exponential Moving Average, Candlestick_Recognition_Master, Momentum (13)
Preferred time frame(s): 1 min and up
Trading sessions: London and New York for 5 min, 15 min and 30 min charts. No restrictions for timeframe’s above 30 min.
Preferred Currency pairs: any
Example: EUR/AUD 1 Minute Chart
Here’s a great scalping trade on the 1 min EUR/AUD chart above: price below the 100 EMA + Dark Cloud Cover (DCC) pattern + Momentum below 100 = qualified sell signal. Place low risk stop-loss above the DCC pattern.
Qualified Buy Signal:
No buy trades from this strategy, only sell trades.
Qualified Sell Signal:
- Price trades below the 100 EMA (down trend)
- Momentum below 100
- Candlestick Recognition Master indicator shows DCC symbol (Dark Cloud Cover pattern)
==> Open short trade and place a protective stop-loss above the high of the DCC trading pattern.
Price Target: I suggest a risk-to-reward of at least 2, which means you are only risking one dollar for every two dollars of profit potential, or any other profit taking method you feel more comfortable with.
Strategy tip: Turn off all Candlestick Recognition Master indicator alerts (set to false) except the Dark Cloud Cover pattern.