Indicator
signal
"dark-cloud" logo
dark-cloud
0.0
03/09/2025
88
Desktop

The Dark Cloud Cover indicator is a technical analysis tool designed to identify potential bearish reversal patterns in the market. This pattern consists of two consecutive candlesticks:

  1. A bullish (green) candle that signals strong buying momentum.
  2. A bearish (red) candle that opens above the previous close but closes below the midpoint of the prior candle, indicating selling pressure.

This formation suggests a potential shift in market sentiment, where buyers lose control and sellers take over.

Features & Functionality:

  • Pattern Detection:
    • The indicator scans for the Dark Cloud Cover pattern based on candlestick price action.
    • When detected, it visually highlights the pattern to alert traders.
  • Trend Filter (Optional):
    • To improve accuracy, the indicator includes an optional trend filter using a Moving Average (MA).
    • If enabled, the pattern is only considered valid when occurring in an uptrend.
  • Confirmation Logic:
    • The indicator can validate the bearish signal by checking the next candle.
    • A confirmation candle is identified if it closes below the Dark Cloud Cover low and has higher tick volume than the average of recent candles.
    • This ensures stronger reliability of the signal.
  • Visual Markers:
    • Yellow Candles: Mark the detected Dark Cloud Cover pattern.
    • Orange Candles: Highlight the confirmation candle if volume conditions are met.

This indicator helps traders spot high-probability reversal setups, improving decision-making for short entries or risk management strategies.

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