The harami candlestick pattern is a two-candle reversal signal that indicates a potential change in trend direction. The word harami means pregnant in Japanese, describing how the second candle is contained within the body of the first candle like a baby inside its mother. This guide explains both bullish and bearish harami patterns and how to trade them.
What is a Harami Pattern?
A harami pattern consists of two candlesticks where the second candle's body is completely contained within the body of the first candle. The pattern shows that momentum is slowing and a reversal may be coming.
Key concept: The harami is the opposite of an engulfing pattern. In an engulfing pattern, the second candle swallows the first. In a harami pattern, the second candle is swallowed by the first. This containment shows that the trend is losing steam.
Bullish Harami Pattern
A bullish harami appears at the bottom of a downtrend and signals a potential bullish reversal.
Bullish Harami Requirements
- Must appear after a downtrend
- First candle is a large red (bearish) candle
- Second candle is small and contained within the first candle's body
- Second candle can be red or green (green is slightly stronger)
- Shadows can extend outside, but the body must be inside
Bullish Harami Example
Stock ABC has dropped from $50 to $40 over two weeks.
- Day 1: Large red candle, opens $42, closes $40
- Day 2: Small green candle, opens $40.50, closes $41
- The second candle body is entirely within the first candle body ($40 to $42)
- Signal: Selling pressure is weakening, potential reversal ahead
Bearish Harami Pattern
A bearish harami appears at the top of an uptrend and signals a potential bearish reversal.
Bearish Harami Requirements
- Must appear after an uptrend
- First candle is a large green (bullish) candle
- Second candle is small and contained within the first candle's body
- Second candle can be red or green (red is slightly stronger)
- Shadows can extend outside, but the body must be inside
Bearish Harami Example
Stock XYZ has rallied from $80 to $100 over three weeks.
- Day 1: Large green candle, opens $98, closes $100
- Day 2: Small red candle, opens $99.50, closes $99
- The second candle body is entirely within the first candle body ($98 to $100)
- Signal: Buying pressure is weakening, potential reversal ahead
Harami Cross Pattern
A harami cross is a stronger variation where the second candle is a doji. Because a doji represents perfect indecision, a harami cross signals a more significant potential reversal.
Bullish Harami Cross
A large bearish candle followed by a doji that is contained within its body. This appears at bottoms and is a stronger bullish signal than a regular bullish harami.
Bearish Harami Cross
A large bullish candle followed by a doji that is contained within its body. This appears at tops and is a stronger bearish signal than a regular bearish harami.
The Psychology Behind Harami Patterns
Bullish Harami Psychology
After a downtrend, sellers push prices significantly lower with a large bearish candle. The next day opens within the previous day's range and trades in a narrow range before closing within the previous body. This shows that sellers have lost their momentum and cannot push prices lower. The contained candle represents a pause that often precedes a reversal.
Bearish Harami Psychology
After an uptrend, buyers push prices significantly higher with a large bullish candle. The next day opens within the previous day's range and trades in a narrow range before closing within the previous body. This shows that buyers have lost their momentum and cannot push prices higher. The contained candle represents exhaustion at the top.
How to Trade Harami Patterns
Trading Bullish Harami
Long Setup
- Confirmation: Wait for a green candle to close above the harami high
- Entry: Buy when price breaks above the second candle high
- Stop loss: Below the first candle low
- Target: Previous resistance or 2:1 risk-reward ratio
Trading Bearish Harami
Short Setup
- Confirmation: Wait for a red candle to close below the harami low
- Entry: Short when price breaks below the second candle low
- Stop loss: Above the first candle high
- Target: Previous support or 2:1 risk-reward ratio
Harami vs Engulfing Patterns
Understanding the difference between these opposite patterns is crucial:
Pattern Comparison
- Harami: Second candle is small and inside the first candle
- Engulfing: Second candle is large and covers the first candle
- Signal strength: Engulfing patterns are generally stronger than harami patterns
- Confirmation need: Harami patterns require more confirmation due to their weaker signal
Factors That Strengthen Harami Patterns
- First candle size: A very large first candle followed by a tiny second candle is stronger
- Doji as second candle: Harami cross patterns are more reliable
- Support/resistance: Patterns at key levels have higher success rates
- Volume decrease: Lower volume on the second candle shows momentum loss
- Confirmation candle: A strong third candle in the reversal direction confirms the pattern
Real Trading Scenarios
Scenario 1: Bullish Harami at Support
A stock falls to a major support level. On the first day, a large red candle touches the support. The next day, a small candle forms entirely within the previous body. A confirmation candle the following day bounces strongly off support. This setup combines the harami pattern with support level for a high-probability long entry.
Scenario 2: Bearish Harami Cross at Resistance
A stock rallies to resistance and forms a large bullish candle followed by a doji inside it. This harami cross at resistance is a strong warning sign. When confirmed by a bearish candle, it often leads to significant declines.
Scenario 3: Harami in Range-Bound Market
During consolidation, harami patterns have less significance because there is no trend to reverse. In these cases, look for haramis at the edges of the range for potential breakout or reversal signals.
Common Mistakes to Avoid
- No trend context: Harami patterns need a trend to reverse
- Skipping confirmation: Haramis often fail; wait for confirmation
- Body not fully inside: If any part of the second body extends beyond the first body, it is not a harami
- Using in isolation: Combine with support/resistance and other indicators
- Wrong timeframe: Haramis on very short timeframes are unreliable
Volume Analysis with Harami Patterns
Volume provides important context:
- First candle: High volume shows strong trend continuation attempt
- Second candle: Lower volume shows momentum loss, strengthens the pattern
- Confirmation candle: Volume increase confirms the reversal
Track Your Harami Pattern Trades
Pro Trader Dashboard lets you categorize trades by pattern type. Analyze your harami trade performance and discover which setups work best for your trading style.
Summary
The harami pattern is a two-candle reversal signal where the second candle is contained within the first candle's body. Bullish haramis appear at bottoms after downtrends, while bearish haramis appear at tops after uptrends. Harami cross patterns (with a doji as the second candle) are stronger signals. Always wait for confirmation and combine with support/resistance levels for the best results.
Learn more reversal patterns in our engulfing pattern guide or explore piercing patterns.