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Bearish Engulfing patterns and Dark Cloud patterns are bearish candlestick reversals that form with two candlesticks. The first candlestick of a bearish engulfing is white with a large or small body. The open and close form the candlestick body. The second candlestick is black and totally engulfs the first. This means the open is above the prior close and the close is below the prior open. Prices started out strong, but reversed course and closed weak. The prior advance was totally reversed.
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A Dark Cloud pattern also has two candlesticks, but the first should be a long white candlestick. No short white candlesticks allowed here. The second is a large black candlestick that closes below the mid point of the white candlestick body. This means prices continued higher with a strong open, but quickly reversed and closed weak.
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Both the Dark Cloud and the Bearish Engulfing mark intraday reversals. If weekly candlesticks are used, these candlesticks mark a reversal from Monday to Friday. There was a strong open Monday, a decline and a weak close on Friday. Stockcharts.com provides predefined scans for Bearish Engulfing patterns and Dark Cloud patterns using daily data.
