Harami Candlestick Pattern Means Trend Reversal!

Harami is one of the important candlestick patterns that warn of a potential trend reversal in the market. It is a two stick pattern meaning it takes two days for the Harami pattern to form. Harami is the Japanese for a pregnant woman. This pattern looks like a pregnant woman.

In case of the bullish harami, the first day is a bearish candle that occurs in a downtrend. On the second day, bulls enter the market and start moving the prices higher but not with much success as the price close lower than the open of the first day and the first day’s high is not surpassed. However, when this pattern appears it culminates in a trend reversal.

If you want to identify the bullish harami pattern, it should have the following features. The market should be in a downtrend. The setup day has a longer candle than the signal day. The setup day candle has an open greater than the close and the body is fairly long.

The signal day candle has an open lower than the close. The open of the signal day is higher than the close of the setup day. The low of the setup day is lower than the low of the signal day and the high of the setup day is higher than the high of the signal day. The signal day open is higher than the setup day close and the signal day close is lower than the setup day open. A bearish harami pattern is the exact opposite. It appears in an uptrend with the setup day a long bullish candle followed by a signal day short bearish candle.

When this pattern appears, it means a trend reversal. This pattern has a few variations. One important variation is the Harami Cross. In case of a Harami Cross, the setup day is a bullish or bearish long candle and the signal day is a Doji. Doji is formed when the open and close are the same. This is not a common pattern but when it does appears, it means a sudden trend reversal.

When you trade this pattern, always try to place the stop at the close of the setup day. This way, if the pattern turns out to be false, you can get out of the market without much loss. Get these 3 Swing Trading Systems FREE. Master these highly profitable Candlestick Patterns with this FREE 82 page PDF Candlestick Guide.

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