Piercing Line and Dark Cloud Cover
The piercing line and dark cloud cover are mirror-image two-candle reversals. A piercing line opens below the prior bearish close and closes above its midpoint; a dark cloud cover opens above the prior bullish close and closes below its midpoint.
Both patterns tell the same story in opposite directions: the market opens with a burst in the trend's direction, then reverses hard enough to wipe out more than half of the previous day's move. The piercing line marks a possible bottom, the dark cloud cover a possible top. This entry explains the rules, the midpoint test and how to confirm them.
- Category
- Price Action
- Reading time
- 4 min
- Also called
- Piercing line, Piercing pattern, Dark cloud cover
- Updated
The two patterns in plain words
A piercing pattern pairs a black candle with a white one; the white candle opens below the prior close and closes above the midpoint of the black body.1
A dark cloud cover pairs a white candle with a black one; the black candle opens above the prior close and closes below the midpoint of the white body.2
A further move in the new direction on the third candle provides confirmation.3
How to spot them, step by step
Identify the trend
Down for a piercing line, up for a dark cloud cover. See Trend.
First candle
A large body in the trend's direction.
Open beyond the close
The second candle opens past the first's close.
Cross the midpoint
It closes beyond the middle of the first body.
Wait for confirmation
A follow-through candle the next session.
Set the stop
Beyond the pattern's extreme. See Stop Loss.
Worked examples
Example 1 — Piercing line
Valid piercing lineDay 1: open $60, close $54. Day 2: open $53, close $58.
| Day 1 midpoint | ($60 + $54) ÷ 2 = $57 |
| Day 2 close | $58 > $57 |
The white candle opened below the previous close and closed above the black body's midpoint.1
Example 2 — Dark cloud cover
Valid dark cloud coverDay 1: open $100, close $110. Day 2: open $112, close $103.
| Day 1 midpoint | ($100 + $110) ÷ 2 = $105 |
| Day 2 close | $103 < $105 |
The down candle opened above the up candle's close and closed below its midpoint.3
Example 3 — Not deep enough
No patternDay 1: open $100, close $110. Day 2: open $112, close $106.
| Midpoint | $105 |
| Day 2 close | $106 — above the midpoint |
Closing above the midpoint fails the rule, so this is not a dark cloud cover.2
Piercing line vs dark cloud cover
| Aspect | Piercing line | Dark cloud cover |
|---|---|---|
| Trend before | Down | Up |
| Candles | Black, then white | White, then black |
| Second open | Below prior close | Above prior close |
| Second close | Above midpoint | Below midpoint |
How traders use these patterns
Bottom and top signals
Flagging possible trend changes.
At support and resistance
Stronger at tested levels. See Support and Resistance.
Exit signals
A dark cloud cover can prompt taking profits.
With volume
High volume on day 2 adds weight. See Volume.
Advantages and disadvantages
Advantages
- Clear, rule-based definitions.
- The midpoint test is objective.
- Shows a real shift within two sessions.
Disadvantages
- Weaker than an engulfing pattern.
- Gaps at the open are rare in 24-hour markets.
- Needs confirmation.
Going deeper
Read as far as you need. Each level builds on the one before it.
Context first
Beginner
A dark cloud cover after a sharp decline or near new lows is unlikely to be a valid bearish reversal; there must be an uptrend to reverse.2
Location matters
Intermediate
Piercing lines usually appear at the bottom of a downtrend, where buyers start pushing for a reversal.4 See Support and Resistance.
Engulfing's little brother
Advanced
If the second candle closes beyond the entire first body, the pattern becomes an engulfing pattern, generally seen as stronger. See Engulfing Pattern.
Common mistakes
Skipping the midpoint check
Less than halfway is not the pattern.
Ignoring the trend
Context decides validity.
Trading without confirmation
Wait for the next candle.
Forcing it in forex
Opening gaps are rare in continuous markets.
Check your understanding
Test yourself before moving on. Each answer comes with an explanation.
Key points to remember
- Both are two-candle reversal patterns.
- Piercing line: bullish, closes above the prior midpoint.
- Dark cloud cover: bearish, closes below the prior midpoint.
- They need a prior trend and confirmation.
- Closing beyond the whole body makes it an engulfing pattern.
Frequently asked questions
Which is stronger: piercing line or engulfing?
Does the second candle need a gap?
Are they reliable alone?
Further learning
- Engulfing Pattern
The stronger version.
- Harami
Another two-candle reversal.
- Candlestick
Candle basics.
- Support and Resistance
Where these patterns matter.
Sources
This article is written in our own words. The sources below support the specific facts, rules and figures marked with a number in the text. Links open the original publisher’s page.
- StockCharts ChartSchool. Candlestick Bullish Reversal Patterns (opens in a new tab) Checked .
- StockCharts ChartSchool. Candlestick Bearish Reversal Patterns (opens in a new tab) Checked .
- Corporate Finance Institute. Dark Cloud Cover (opens in a new tab) Checked .
- Corporate Finance Institute. Candlestick Patterns (opens in a new tab) Checked .
Read more elsewhere
- Trading Metrics (our sister site): Piercing Line (opens in a new tab)
Educational content, not financial advice. Examples use hypothetical prices and simplified costs; actual fees, margin rules and regulations vary by broker, market and country. Trading Metrics is our sister site, under the same ownership; we are not affiliated with any other publisher linked above. Last reviewed . Report an error or request a source credit.