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Home Technical Analysis

Harami Candlestick – Bullish & Bearish Harami Pattern

Elearnmarkets by Elearnmarkets
May 16, 2022
in Technical Analysis, Charts, Patterns & Indicators
Reading Time: 7 mins read
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The Harami that means “pregnant” in Japanese is multiple candlestick patterns is considered a reversal pattern.

The first candlestick is referred to as the “mother” with a large real body that embodies the smaller second candlestick, and thus creating the visual of a pregnant mother.

Harami candlestick pattern is the opposite of the engulfing pattern, except that the candlesticks in the harami candlestick pattern can be the same color.

Like the engulfing pattern, this pattern also consists of two candlesticks but with the first candlestick being a large candlestick and the second being a smaller candlestick.

Table Of Contents
  1. What is Bullish Harami Pattern?
  2. What is Bearish Harami Pattern?
    • Learn from Market Experts
  3. Formation:
  4. Harami Cross:
  5. Trading Strategies:
    • 1. Trading Harami with Price Action:
    • 2. Trading Harami with Indicators:
  6. How to use Bullish and Bearish Harami Candlestick Scans in StockEdge:
    • Key Takeaways:

What is Bullish Harami Pattern?

A Bullish Harami candlestick is formed when a large bearish red candle appears on Day 1 that is followed by a smaller bearish candle on the next day.

One should note that the important aspect of the bullish Harami is that prices should gap up on Day 2.

The price is held up by the buyers and is unable to fall to the bearish close of Day 1.

What is Bearish Harami Pattern?

A Bearish Harami candlestick is formed when there is a large bullish candle on Day 1and is followed by a smaller bearish candle on Day 2.

One should note that the important aspect of the bearish Harami candlestick is that prices gapped down on Day 2 and also they were unable to move higher back to the close of Day 1.

Learn from Market Experts

  • Trade Better with Candlesticks
  • Identify Trend Reversals with Candlesticks

This signals that there is uncertainty in the continuation of the ongoing trend.

Formation:

Here is the formation of Bullish and Bearish Harami candlestick Pattern:

bullish-and-bearish-harami-pattern

Harami Cross:

The Harami cross characterized by a very small real body almost like a Doji, the smaller the real body, the better it is for this formation.

Due to the lack of a real body after a strong move tells that the previous trend is coming to an end and a reversal may take place.

The high or low of a Harami cross setup provides resistance or support for any further price moves.

Trading Strategies:

Now let us discuss how you can trade with Bullish and Bearish Harami candlestick:

1. Trading Harami with Price Action:

As the harami candle itself a price action component one should always include the price action strategy option in our analysis.

When we trade with price action, it means to rely fully on the price action on the chart.

This means without any indicators, oscillators or moving averages, etc.

One should rely on the chart patterns, candle patterns, support and resistance, and so on.

trading with price action

Here is an example of trading Bearish Harami using price action. In the daily chart of USD/INR, we can see a Bearish Harami formed at the end of the uptrend.

This Bearish Harami should be confirmed with resistance or any other chart or candlestick pattern.

We can see in the chart how after the pattern formation, the prices have gapped down confirming the reversal signaled by this pattern.

2. Trading Harami with Indicators:

In this trading strategy, we will combine the harami with Bollinger bands.

One should only trade the haramis, which form when the price touches a level of the upper or lower Bollinger bands.

For example, once the price touches the upper Bollinger band at the same time a harami is formed, you can enter a short position as shown below.

trading with indicators

One should hold their position and close it until the price touches the lower Bollinger band.

How to use Bullish and Bearish Harami Candlestick Scans in StockEdge:

You can also use the Bullish and Bearish Harami Candlestick scans in StockEdge web version:

Steps to use Bullish and Bearish Harami in StockEdge:

  • Under the “Candlestick Scans” we can see Bullish and Bearish Reversal Scans as shown below:
reversal-scans
  • When we click on the “Bullish Reversal Scans” we can see “Bullish Harami” scan, click on that:
bullish harami scan
  • After selecting on it, you will get a list of stocks in which “Bullish Harami” pattern is formed as shown below:
bullish reversal scans
  • Similarly, when we click on the “Bearish Reversal Scans” we can see “Bearish Harami” scan, click on that:
bearish harami cross
  • After selecting on it, you will get a list of stocks in which “Bearish Harami” pattern is formed as shown below:
bearish reversal scans

Key Takeaways:

  • The Harami that means “pregnant” in Japanese is a multiple candlestick pattern is considered a reversal pattern.
  • This pattern consists of two candlesticks with the first candlestick being a large candlestick and the second being a smaller candlestick.
  • The Harami cross characterized by a very small real body almost like a Doji, the smaller the real body, the better it is for this formation.
  • As the harami candle itself a price action component one should always include the price action strategy option in our analysis.
  • One should only trade the haramis, which form when the price touches a level of the upper or lower Bollinger bands.

Did you find these candlestick patterns useful? Tell us by commenting below.

Happy Learning!

Tags: candlestick beginners guidecandlestick patternenglishharamitechnical basic
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Comments 4

  1. prashanth says:
    2 years ago

    Thank you so much @ admin for share your valuable thoughts and ideas We always enjoy your articles its inspired a lot by reading your articles day by day. So please accept my thanks and congrats for success of your latest series. We hope, you should published more better articles like ever before

    Reply
    • Sakshi Agarwal says:
      2 years ago

      Hi,

      Thank you for reading our blog!

      You can read more blogs on technical analysis here.

      Keep Reading!

      Reply
  2. Prohlad Naskar says:
    2 years ago

    Kindly explain how Harami Cross works?

    Reply
    • Sakshi Agarwal says:
      2 years ago

      Hi,

      The Harami cross works just the same as the Harami pattern as explained in the blog.

      The only difference is the formation of the Harami Cross. The first candlestick is the long bodied candlestick and the second candlestick is a Doji.

      Thank you for Reading!

      Reply

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