However, as the bulls lose steam, bear regain some control into the close of the candle with selling pressure. Here we have an example of a bullish doji, or spinning top, depending on how you want to look at it. They are generally narrow bodied candles with wicks at both ends, both of which are very important. The disadvantages are as follows – – The investor cannot use this as a sole measure to base investment decisions. Stocks should not be traded based on its formation alone.- Where the pattern occurs within the trend is crucial – it must ideally appear at the bottom of a downtrend. – The use of this requires a very good understanding of technical analysis of indicators.

Trading The Bullish Harami Pattern With Pivot Points

• Just as pregnancy involves a period of gestation before new life emerges, market reversals involve a period of indecision before new trends emerge.
• They would place their stop loss below the low of the bullish candlestick.
• The bullish Harami pattern is a trader’s beacon of hope in a sea of falling prices.
• Yes, the Harami candlestick pattern is versatile and can be applied across various financial markets, including forex, stocks, and commodities.

Additionally, the bullish harami has a relatively basic condition for its two candles to be considered valid. The bullish harami can offer early signs of a possible reversal into a potential uptrend or mark the end of a pullback. This is because this bullish pattern can form after a single bullish session. Well, the pattern’s first candle is technically still part of the bearish trend and, in fact, often signals a continuation of downward momentum—being a long-bodied bearish candle. Yet, when the market gaps higher on the next bullish session that holds above the low, it can already become a viable trend reversal pattern.

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Trading Strategies That Lean on the Harami Candlestick Pattern

Meanwhile, harami candle a bearish harami happens during an uptrend when an asset forms a big bullish candlestick that is then followed by a small bearish trend. After this happens, the price will typically continue the bearish trend. As you can see, a harami candlestick pattern is made of two candle. A closer look shows that the two sticks have a close resemblance to a pregnant woman.

The Bullish Harami Candlestick is a pattern that typically forms after a downtrend, signaling a potential reversal to an uptrend. The first candle in this pattern is a large bearish candle, followed by a smaller bullish candle. The key is that the second candle opens higher than the previous close and closes lower than the previous open, yet within the body of the first candle. This setup suggests that selling pressure is diminishing and a bullish reversal is on the horizon. The most successful traders don’t see harami patterns as geometric shapes on a chart—they see them as emotional stories unfolding in real time. Each pattern represents thousands of individual trading decisions, collective moments of doubt, and the gradual shift from one dominant emotion to another.

While not a guaranteed signal, the Harami is an early warning of a shift in buying or selling pressure. This makes it a powerful tool for technical traders seeking to enter or exit trades strategically. The term “Harami” is derived from an old Japanese word meaning “pregnant,” a metaphor that beautifully captures the essence of this pattern. A Harami Candlestick formation is a two-candle pattern that signals a potential reversal in the market trend. It consists of a large candlestick followed by a smaller candlestick whose body is located within the vertical range of the larger candle’s body.

When Does A Bullish Harami Pattern Appear?

Let’s consider a Bullish Harami spotted in the daily chart of Tesla (TSLA) after a sustained downtrend. The first large red candle was followed by a small green candle completely within its body. Confirmation came the next day with a strong bullish candle, followed by a multi-day rally. In the intricate world of trading, deciphering chart patterns is akin to understanding a unique language spoken by the markets. Among the plethora of patterns, the “Harami Candlestick” emerges as a fascinating subject, offering insights into potential market reversals.

Traders, particularly those who use reversal strategies, view this as a signal to enter short positions. It often appears near resistance levels, making it a reliable pattern for catching potential bearish movements. A Bullish Harami typically forms after a strong downtrend, where the market has been dominated by sellers. However, when the second, smaller candlestick (the “baby”) appears within the body of the larger bearish candlestick (the “mother”), it suggests that the bearish momentum is starting to fade. The combination of the mother candlestick’s dominance and the baby candlestick’s hesitation captures a moment of market tension. This tension often precedes a significant price movement, offering traders the chance to act decisively.

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By the end, you should be able to spot bullish and bearish dojis, spinning tops, and haramis! In fact, we hope you’ll understand how to trade doji candlestick patterns. The harami candlestick pattern has both bullish and bearish variations. The Harami pattern begins with a large candlestick indicating a strong prevailing trend. This is followed by a smaller candlestick, whose real body lies completely within the previous candle’s body. This containment suggests that market momentum is weakening, creating a potential reversal opportunity.

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• Candlestick charting originated in Japan during the 18th century, primarily used by rice traders to track market prices and trends.
• The basic bullish harami is just the beginning of a family of patterns that share the same psychological foundation but offer different signals and trading opportunities.
• The effectiveness of the Harami and Harami Cross patterns largely depends on the market context in which they appear.
• The Harami pattern is one of the most versatile and dynamic candlestick patterns that you will come across.
• The first candlestick — often called the “mother” — has a large real body that represents the dominant trend.

The Harami pattern originates from Japanese candlestick charting techniques, a method developed centuries ago by rice merchants to predict price movements. Today, it is widely adopted by modern traders for its reliability and ability to simplify complex market behaviors into actionable signals. Like all candlestick patterns, the bearish Harami can generate false signals, particularly in choppy or range-bound markets where price action lacks clear direction.

It can also be a bullish or bearish doji candle, but is considered the opposite pattern to the Gravestone Doji. Be sure to check out our other posts for an in depth look at how to trade using the Gravestone Doji reversal pattern, along with other candlestick pattern resources. Up to this point, we have covered the basics of what Indecision Candles and doji candlesticks are and how they are formed.

Should I combine the harami with other indicators?

Firstly, we notice that a bullish Spinning Top forms immediately after the bullish Dragon Fly doji candle at the bottom of the down trend. However, we are surprised when the price begins to reverse, culminating in a bullish Dragonfly Doji pattern. As an indecision candlestick pattern, it has all the same qualities we have mentioned for the Gravestone Doji. Depending on the context, these candles can be bullish or bearish. They can even be neutral in a sideways/non-trending environment.

Unsurprisingly, everything about the former is identical to the latter, except for being directed in the opposite direction. Dojis are widely regarded as indecision candles and rarely appear in a recognised two-bar structure like the harami cross. This makes the latter a distinct pattern with arguably greater significant than the ordinary harami. Entry happens on a breakout above the high of the harami candle, with a stop-loss below the low of the pattern. Here, we have the harami near a point of a trend line break (something alluded to earlier as crucial when identifying the pattern).

For example, if it is a bullish Harami pattern, is the stock in an oversold downtrend with a high volume spike signaling a reversal? In contrast, the bullish Harami doji must be bullish/green and close inside a large bodied bearish candle. Thankfully for the longs, after the Spinning Top, the price moves decisively and violently higher on heavy volume, signaling our long entry.