The Harami pattern is made up of a large first candlestick and a small second candlestick whose body is enclosed by the first candle’s body. It’s formed when a small body candle is completely engulfed by the previous candle’s body. There are two types of harami: bullish and bearish. A bullish harami is a bullish reversal pattern that occurs after a downtrend. A bearish harami is a bearish reversal pattern that occurs after an uptrend. Harami patterns is be used to identify potential trend reversals.
Bullish Harami; There is a clear downward trend in price and a large bearish candle is the first candle. Price gaps up when the first candle opens, but the second candle’s body is contained inside the first candle’s body.
Bearish Harami; There is a clear uptrend in price, a large bullish candle is the first candle, and a smaller, bearish candle is the second candle. The price gaps down when the first candle opens, but the second candle’s body is contained inside the first candle’s body.
How to Identify a Harami Pattern
To identify a Harami pattern, you have to look out for the following;
There is a predominant pattern, whether it’s an upward or downward trend, there is a predominant pattern.
It is a candle with a small body that is completely engulfed by the previous candle’s body.
The direction of the trend must be continued by the first candle. The body will be long and be the exact color as the current trend.
The harami candle should have short or no wicks, it is not necessary
