The first day of the pattern should be a longer bullish candle and gap up on the second day (red candle at the top) creating a new high. At the open on the second day, the bulls were still in control.

Then during the day, the price dropped. It should close deep inside the prior candle. The deeper into the prior candle the stronger the pattern. I think it should close at least 50% into the prior candle. (If it becomes an Engulfing pattern then it is no longer a Dark Cloud Cover. I would consider Engulfing Patterns to be a stronger pattern.)

The confirmation pattern on the third day does not have to close below the prior candle but it must not close higher or it voids the pattern. I do feel that a stronger confirmation will be when a candle does close below the first candle of the pattern. You might even have to wait a day or two for that to happen though.

If the second day is a Bearish Engulfing pattern it’s a really strong indication that a reversal will take place and the Bears will be in control.

You could use the high of the pattern to place your stop.

Click on the chart below to enlarge it.