Bullish Harami and Bearish Harami Harami Patterns Explained

A doji forms when the open and close prices are almost identical, creating a cross-like shape with a very small or nonexistent body. Strike offers a free trial along with a subscription to help traders and investors make better decisions in the stock market. We put all of the tools available to traders to the test and give you first-hand experience in stock trading you won’t find elsewhere. We will help to challenge your ideas, skills, and perceptions of the stock market. What we really care about is helping you, and seeing you succeed as a trader.

What is the ideal time to trade utilizing the Bullish Harami Candlestick Pattern?

The image above shows that the confirmation candlestick closes above the second candlestick of the pattern. The trend is assumed to continue once the confirmation candlestick confirms the trend reversal. Investors and traders can also use other momentum-based indicators such as the MACD or RSI to confirm the predictions made by the bullish harami patterns. Looking closely, we can observe how the bullish harami was also preceded by a bearish trend (downtrend). The bullish harami is considered to be a reliable setup for identifying potential trend reversal from down to up.

The harami cross pattern suggests that the previous trend may be about bullish harami candle to reverse. The bullish pattern signals a possible price reversal to the upside, while the bearish pattern signals a possible price reversal to the downside. Candlestick patterns are an important aspect of technical analysis in trading, providing vital insights into market mood and potential trend reversals.

It represents indecision from the buyers and potential change of momentum because the doji “gaps” open closer to the mid-range of the previous candle. The tall black candle speaks of a continued downward price trend but the next day, a white candle appears. All ranks are out of 103 candlestick patterns with the top performer ranking 1. “Best” means the highest rated of the four combinations of bull/bear market, up/down breakouts. To trade the Bullish Harami candlestick pattern it’s not enough to simply find a pattern with the same shape on your charts. RSI (Relative Strength Index) measures overbought/oversold levels also help verify the harami.

If the preceding trend has been prolonged, that might signal a stronger reversal than a short-term reversal. When the price reversed from the major drop, it turned into a rising wedge pattern inside a larger cup pattern. At the top of the rising wedge was a bearish harami, or some might consider a tweezer top near the top of the cup, signaling a bearish reversal. Several traders attach more importance to the Harami cross candle pattern compared to the regular Harami pattern. Just like the normal Harami patterns, there are also two types of Harami cross patterns–Bullish and Bearish.

A deeper analysis provides insight using more advanced candlestick patterns, including island reversal, hook reversal, and san-ku or three gaps patterns. The bullish harami candlesticks pattern has a large bearish candle engulfing a small bullish candle. The word harami is a Japanese word for pregnant; the outline of the pattern looks like a pregnant woman. When the bullish harami candle forms, the birth happens, and the trend changes.

Bullish Harami Pattern Pros and Cons

1. We love the diversity of people, just like we like diversity in trading styles.
2. A bullish harami candlestick is a price chart formation that signals bullish trend reversals.
3. If you get a confirmation, this should trigger a sell signal which could be a sign for investors to pull out of the market.
4. You may use it for free, but reuse of this code in publication is governed by House rules.
5. While it’s easy to identify and provides clear entry points, confirming the signal with additional indicators for increased reliability is essential.
6. As said above, this pattern consists of a bullish candle following a bearish one.

The entry point for a bullish harami is when the price breaks above the high of the small bullish candlestick. While the Bullish Harami signals a possible change from a downtrend to an uptrend, the Bearish Harami suggests a switch from an uptrend to a downtrend. In a Bearish Harami, a large bullish candle is followed by a smaller bearish candle within the body of the first candle. The Harami Cross pattern, just like the regular Harami pattern, is a candlestick pattern that can be a Bullish or Bearish trend reversal based on where it is positioned on the chart. Depending on where the trend is moving, the pattern can signal either a bullish or bearish reversal. The Bullish Harami pattern predicts a change from negative to bullish market sentiment.

1. Our third strategy focuses on trading with two trend indicators, the Know Sure Thing and Fisher Transform Indicators.
2. To find a bullish RSI Divergence we want to see the price on a downtrend first, making lower lows and lower highs.
3. While the Bullish Harami signals a possible change from a downtrend to an uptrend, the Bearish Harami suggests a switch from an uptrend to a downtrend.
4. Technical analysis involves spotting this precise formation to attempt to capture gains from the start of Bullish Harami’s forecasted ascent.
5. If it’s money and wealth for material things, money to travel and build memories, or paying for your child’s education, it’s all good.
6. In conclusion, these patterns have proven to be valuable tools for making profitable trades.

Investors and traders can easily identify the bullish harami pattern on a price chart using its unique shape that resembles a pregnant woman. The image below shows an example of a bullish harami candlestick pattern used in trading. There are primarily three steps to trading in the stock market using the bullish harami pattern.

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Gordon Scott has been an active investor and technical analyst or 20+ years.

Combining Fibonacci retracements with the Bullish Harami pattern provides a more comprehensive view of the market, enhancing your trading strategy. Our content is packed with the essential knowledge that’s needed to help you to become a successful trader. We realize that everyone was once a new trader and needs help along the way on their trading journey and that’s what we’re here for. We have members that come from all walks of life and from all over the world.

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We teach day trading stocks, options or futures, as well as swing trading. Our live streams are a great way to learn in a real-world environment, without the pressure and noise of trying to do it all yourself or listening to “Talking Heads” on social media or tv. However, since it was near previous resistance, it had a brief breakout, becoming a fakeout and becoming a head and shoulders failure. If entering a short, a stop loss can be placed above the high of the doji or above the high of the first candle. One possible place to enter the trade is when the price drops below the first candle open.

The first candle is a bigger, bearish candle, followed by a second, smaller, bullish candle that’s contained within the bearish candle. The word harami means pregnant, so picture this visual when looking at the pattern because the small candle looks like the belly of the candle. Look for the price to break above the small candle to confirm a bullish continuation.