The Harami Cross is a Japanese candle stick pattern that is formed when a doji candle is engulfed by the previous candle’s body. Doji candles have very small bodies and long wicks, and they indicate indecision in the market. The cross pattern is considered a more reliable indicator of trend reversal than the standard harami pattern. It can be either bullish or bearish, depending on the direction of the trend.
Bullish Harami Cross; it is formed by a small red (or bearish) candle that is engulfed by a large green (or bullish) candle. This pattern suggests that the market is experiencing indecision, but that the bulls are poised to take control. Like the bearish pattern, the bullish cross pattern is considered to be a more reliable pattern than the standard bullish pattern.
Bearish Harami Cross; it is a specific type of bearish Harami pattern. It is formed by a small green (or bullish) candle that’s engulfed by a large red (or bearish) candle. The doji candle in the middle represents indecision in the market, and the large red candle shows that the bears are taking control. it is a pattern that is considered a more reliable bearish signal than the standard bearish pattern.
How to Identify Harami Cross
To identify the pattern, look out for the following;
- A large downward candle accompanied by a doji indicates a Bullish Harami Cross. It happens when there is a downtrend.
- A high rise in price following the pattern validates the bullish Harami Cross.
- A large candle followed by a doji indicates a bearish Harami Cross. it happens during an uptrend
- The bearish is confirmed by a decline in price following the pattern.
