Harami Pattern
Quick Definition
A two-candlestick reversal pattern where the second candle's body is completely contained within the first candle's body, signaling potential trend change.
Key Takeaways
- A harami is an "inside" pattern where the second candle's body fits entirely within the first candle's body.
- Bullish harami appears in downtrends (bearish then small bullish); bearish harami appears in uptrends.
- A harami cross (second candle is a doji) is a stronger signal — always seek confirmation from the third candle.
What Is Harami Pattern?
The Harami (Japanese for "pregnant") is a two-candlestick reversal pattern where the second candle's real body is completely contained within the real body of the preceding candle. A Bullish Harami appears in a downtrend: a large bearish candle is followed by a smaller bullish candle that opens and closes within the range of the first candle's body. A Bearish Harami appears in an uptrend: a large bullish candle is followed by a smaller bearish candle contained within the first body. The pattern suggests that the prevailing trend is losing momentum — the large first candle shows the current trend's strength, but the small second candle indicates indecision and potential exhaustion. A Harami Cross — where the second candle is a doji — is considered a stronger reversal signal because the doji demonstrates even greater indecision. While the harami is a moderate-strength reversal signal (weaker than engulfing patterns), it becomes more significant when occurring at key support/resistance levels, on increased volume, or when confirmed by the third candle.
Harami Pattern Example
- 1A bullish harami formed at the 200-day moving average: a large red candle was followed by a small green candle completely inside the first body — the subsequent breakout above the first candle's high triggered a 10% rally.
- 2The bearish harami cross at resistance was particularly powerful because the second candle was a doji, showing complete indecision after the strong bullish candle — the stock reversed 8% over the next week.
Related Terms
Engulfing Pattern
A two-candle reversal pattern where the second candle's body completely engulfs the first, signaling a shift in momentum — bullish when it follows a downtrend, bearish after an uptrend.
Doji
A candlestick pattern where the opening and closing prices are virtually equal, creating a cross-like shape that signals market indecision and a potential trend reversal.
Morning Star
A bullish three-candlestick reversal pattern featuring a large bearish candle, a small-bodied middle candle (the "star"), and a large bullish candle, signaling a bottom.
Evening Star
A bearish three-candle reversal pattern consisting of a large bullish candle, a small-bodied candle that gaps up, and a large bearish candle that closes well into the first candle's body.
Moving Average
A calculation that averages a security's price over a specific number of periods, smoothing price data to identify trends.
Relative Strength Index (RSI)
A momentum indicator measuring the speed and magnitude of price changes on a 0-100 scale, used to identify overbought or oversold conditions.
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