DarkCloudCover

Description

Dark Cloud Cover is a two candlestick, bearish reversal pattern. The previous candlestick has a long, white real body. The current candlestick opens above the previous candlestick's high (gaps up) but descends to a level near, but above, the previous candlesticks's real body low. (Note: were the current candlestick to descend below the previous candlestick's real body low, a bearish Engulfing Pattern would emerge.)

While the current candlestick's real body low is greater than the previous candlestick's real body low, Dark Cloud Cover exists. The greater the penetration into the previous bar's real body, the stronger the pattern.

If the current bar opens above a major resistance level and Dark Cloud Cover ensues, the bulls have failed to sustain control.

High volume at the current bar's open followed by a falling prices may indicate an over-extension of bullish sentiment.

Dark Cloud Cover's companion pattern is the Piercing Pattern.

Formula

DarkCloudCover(INPUT,Stringency=7,LRRange=10,LRType=3, RealBodyPercentage=10)=begin

  retval = NONUM

  targetBar = 0

  cOpen = GetPrice($1, BATE_OPEN, targetBar, 0)

  cClose = GetPrice($1, BATE_CLOSE, targetBar, 0)

  cLow = GetPrice($1, BATE_LOW, targetBar, 0)

  pOpen = GetPrice($1, BATE_OPEN, (targetBar + 1), 0)

  pClose = GetPrice($1, BATE_CLOSE, (targetBar + 1), 0)

  pHigh = GetPrice($1, BATE_HIGH, (targetBar + 1), 0)

  pMid = RealBodyMidPoint($1, (targetBar+1))

  if BlackBody($1, targetBar) == TRUE then begin

    if WhiteBody($1,(targetBar + 1)) == TRUE OR DojiForm($1, (targetBar + 1), RealBodyPercentage) OR LongWhiteForm($1, (targetBar + 1)) == TRUE then begin

      if cOpen > pClose And cClose > pOpen And cClose < pClose then begin

        if Stringency >= 7 then retval = '7'|clr_red|ftiny|above|arrow|vertical

        if cOpen > pHigh then begin

          if Stringency >= 6 then retval = '6'|clr_red|ftiny|above|arrow|vertical

          if cClose <= pMid then begin

            if Stringency >= 5 then retval = '5'|clr_red|ftiny|above|arrow|vertical

            if Bullish($1, targetBar, LRRange, LRType) == TRUE then begin

              if Stringency >= 4 then retval = '4'|clr_red|ftiny|above|arrow|vertical

              if NewHigh($1, targetBar) == TRUE then begin

                if Stringency >= 3 then retval = '3'|clr_red|ftiny|above|arrow|vertical

                if cClose <= pMid then begin

                  if Stringency >= 2 then retval = '2'|clr_red|ftiny|above|arrow|vertical

                  if cClose > pOpen then begin

                    retval = 'DARK CLOUD COVER'|clr_black|ftiny|above|arrow|vertical

                  end

                end

              end

            end

          end

        end

      end

    end

  end

  retval

end

Parameters

INPUT

The INPUT directive makes this formula available as a Formula Overlay. INPUT refers to the instrument in the chart.

Stringency=7

The Stringency argument is used by nearly all candlestick overlays. It controls how many tests must pass in the evaluation of an Dark Cloud Cover. The lower the number, the more strict the interpretation.

The Stringency argument is an overlay parameter. You can adjust it using the Parameters dialog. The default is 7.

LRRange

The DarkCloudCover overlay uses the LR() function with either a continuous or quadratic calculation to determine how the market is trending. The LRRange (Linear Regression Range) parameter is the number of points in the Linear Regression calculation. The default is 10.

LRType

The LRType parameter has two possible settings: 2 and 3, or continuous linear regression and quadratic linear regression, respectively. The default is 3, or quadratic.

RealBodyPercentage

The RealBodyPercentage parameter enables you to adjust the how large the real body of a Doji candlestick can be.

Return Value

The return value is a string plot and varies depending on the value of the Stringency parameter.  The lower the number, the stronger the pattern.

Bearish indicators are rendered in red above the candlestick. Bullish indicators are rendered in green below the candlestick.

The string plot for a fully qualified Dark Cloud Cover pattern is "Dark Cloud Cover."

Examples

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