Skip to content

Dark Cloud Cover Forex Strategy

    What is a Dark Could Cover pattern? A Dark Could Cover pattern occurs when a red bearish candlestick (close price below open price) on day 2 closes below the middle of day 1 bullish candlestick (close price above open price).

    We will be using this pattern to sell rallies in a bearish currency market.

    The DCC forex strategy consists of two TA indicators and the Dark Could Cover pattern.

    You can use this strategy for scalping, day trading, swing trading and long-term trading.

    Dark Cloud Cover Setup


    Chart 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


    Download the Dark Cloud Cover Forex Strategy.

    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.

    Trading Rules

    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.