Dark Cloud Cover Candlestick Pattern: The Candles at Apple's $3 Trillion Top and AMD's 2021 Record High

On January 4, 2022, the day after Apple first touched a $3 trillion market value, Apple completed a dark cloud cover at its record high. Sold at that close with a stop above its high, the trade risked 1.8%. By June 16 the stock was down 27.6%.

On November 30, 2021, AMD printed one at its own record high. The risk was 3.8%. By April 27, 2022 the stock was down 46.4%, and on October 14, 2022 it closed 64.7% lower.

Apple's high held for 355 sessions, AMD's for 535. Here is how to read a dark cloud cover, where the stop goes, and how to find the next one.

What the fall cost#

A dark cloud cover is a sell signal for holders and an entry for short sellers.

Prices are split-adjusted, as on the chart.

The 2021 top: six record highs#

Apple and AMD were not alone. From November 2021 to January 2022, dark cloud covers set the record highs of these stocks, and each high held for more than a year.

The dark cloud cover in one table#

A dark cloud cover is two daily candles: a long green day, then a red day that opens above the green close and closes below the middle of the green body. Buyers ran the first day and opened the second one higher. Sellers took back more than half of the first day by the close. It is the piercing line turned upside down, at a top instead of a bottom.

These are the rules the VCP Scanner terminal uses to name a dark cloud cover on a daily chart.

The midpoint is the line that matters. Apple's day 2 closed at 179.70, 22 cents under the 179.92 midpoint of its green day. A close above the midpoint is not a dark cloud cover, and a close at or below day 1's open makes it a bearish engulfing.

The position rule matters too. A dark cloud cover comes after a rally. At the bottom of a decline, the mirror image is a piercing line.

Dark cloud cover and its look-alikes#

The bearish engulfing is a dark cloud cover that went all the way: its red day closes at or below the green open. The bearish harami is the quiet version: its second day stays inside the green body. Apple's pair was also a tweezer top, with its two highs 6 cents apart.

Example 1: Apple (AAPL) at its $3 trillion top, Jan 4, 2022#

Open AAPL in the VCP Scanner terminal →

What followed:

• Next session (Jan 5): closed at 174.92, −2.7% and already below the pattern's low of 177.71. Its high that day, 180.17, was the closest Apple came to the stop in the next 120 sessions.
• Ten sessions later (Jan 19): 166.23, −7.5%.
• Mar 14: 150.62, −16.2%.
• Jun 16: 130.06, −27.6%. That is 15.3 times the 3.24 risked on each share.
• The high of 182.94 held for 355 sessions, until Jun 5, 2023. Before it broke, Apple's lowest close was 125.02 on Jan 5, 2023, 30.4% below the pattern's close.

Apple's fall had no gap of 5% or more. Its best close in those 120 sessions, 178.96 on Mar 29, was still below the pattern's close.

A 1.8% stop makes a big position: with $500 at risk, the stop sized a short at 154 shares, about $27,674. At the Jun 16, 2022 close the short was up $7,645.

Example 2: AMD at its 2021 record high, Nov 30, 2021#

Open AMD in the VCP Scanner terminal →

What followed:

• Next session (Dec 1): closed at 149.11, −5.8% and already below the pattern's low of 155.68.
• Ten sessions later (Dec 14): 135.60, −14.4%.
• Jan 27, 2022: 102.60, −35.2%.
• Apr 27, 2022: 84.91, −46.4%. That is 12.1 times the 6.09 risked on each share.
• The high of 164.46 held for 535 sessions, until Jan 18, 2024. Before it broke, AMD's lowest close was 55.94 on Oct 14, 2022, 64.7% below the pattern's close.

The fall came without a big gap down. The only gaps of 5% or more in those 120 sessions were up, each the session after an earnings report: +11.2% on Feb 2, 2022 and +7.7% on May 4, 2022.

With $500 at risk, the stop sized a short at 82 shares, about $12,986. At the Apr 27, 2022 close the short was up $6,024.

Where a dark cloud cover counts: key levels#

A dark cloud cover on a level is a test of that level from below. In the terminal, the Only at a key level switch is on by default and keeps the dark cloud covers that close back below one of these:

Apple's came at a prior high: both days traded above the Dec 13, 2021 high of 182.13 and closed back below it, so it shows with the switch on. AMD's set a record with no earlier high to poke. To see dark cloud covers like it, turn Only at a key level off.

Both stocks were in Stage 2, Stan Weinstein's advancing stage: the stock trades above a rising 30-week average. A dark cloud cover in Stage 2 marks a top inside an uptrend, a place to take profits or tighten a stop as much as a place to short.

How to trade a dark cloud cover#

1. Find the high. A dark cloud cover comes after a rally. Look for it at a prior high, a failed breakout's pivot, a falling average or a fresh record, like Apple's and AMD's at the 2021 top.
2. Check the close. Day 2 must close below day 1's midpoint. Apple's closed at 179.70 under a 179.92 midpoint, and AMD's at 158.37 under 159.71.
3. Choose your entry. Holders sell or tighten their stop at day 2's close, and some short sellers enter there. Others wait for a close below the pattern's low. Apple and AMD both gave that close the very next session.
4. Put the stop above the high. Above the higher of the two highs (day 2's in both examples), or above the highest high of the test if price went higher earlier in it. The terminal calls this "the high, test included".
5. Size from the stop. Shares = money at risk ÷ (stop − entry). With $500 at risk on AMD: 500 ÷ (164.46 − 158.37) = 82 shares.

Find dark cloud covers on any chart in VCP Scanner#

• Open a stock in the terminal, for example AAPL or AMD.
• Open Candles in the chart toolbar and tick Dark cloud cover, or use the Reversals quick pick for every classic reversal candle.
• Only at a key level is on by default. Turn it off to see every dark cloud cover on the chart.
• The chart jumps to the latest dark cloud cover. A dot marks each one above its high, and the selected one shows its stop on the price scale.
• The inspector lists the close, stop, risk to stop, level, volume and stage. Walk through the others with the ← and → keys.
• Mark the ones you care about with the drawing tools. The arrows in the charts above are the Arrow Marker (Alt+A): click where the arrow starts, then click the candle.

Candles are free, on daily, weekly and monthly charts.

Bottom line#

• A dark cloud cover is a long green day answered by a red day that takes back more than half of it, after a rally.
• Apple's marked its $3 trillion top in January 2022 and AMD's its record high in November 2021. They risked 1.8% and 3.8%, and the stocks fell 27.6% and 46.4% within 120 sessions.
• The pattern's high is the stop. It defines your risk before you take the trade.

Data: VCPScanner daily market data through Nov 3, 2026, split-adjusted. The examples are for education, not recommendations.