Harami is a popular candlestick pattern that signals a possible trend reversal. It consists of two candlesticks: a larger one followed by a smaller one that is fully contained within the body of the first candlestick.
Learn to spot this pattern in order to improve your trading.
How Harami works
For the pattern to be valid, the second candlestick must be completely inside the body of the first candlestick.
Harami often appears after a strong trend, whether upward or downward. If the second candlestick fails to break the highs or lows of the first candlestick, it signals that the current trend might be slowing or reversing.
The pattern name ('bullish Harami' or 'bearish Harami') matches the direction of the second candle.
A bullish and bearish Harami pattern
In a bullish Harami, the first candlestick goes down (bearish), while the second candlestick goes up (bullish).
In a bearish Harami, the first candlestick goes up (bullish), while the second candlestick goes down (bearish).
Reading Harami signals
Buy signal
A Buy signal occurs when the Harami pattern completes above a support level and the second candlestick fully closes within the first one.
Sell signal
A Sell signal occurs when the Harami pattern completes below a resistance level and the second candlestick fully closes within the first one.
When you spot a bullish Harami pattern
Ensure the pattern has formed near the support level.
Place a Buy order with your stop loss at or below the nearest low.
Calculate your position size, making the stop loss no more than 5% of your total deposit.
Set your take profit near a significant resistance level or hold the position as long as the uptrend continues.
Bearish Harami
When you spot a bullish Harami pattern
Ensure the pattern has formed near the support level.
Place a Buy order with your stop loss at or below the nearest low.
Calculate your position size, making the stop loss no more than 5% of your total deposit.
Set your take profit near a significant resistance level or hold the position as long as the uptrend continues.
Bearish Harami
When you spot a bearish Harami pattern
Ensure the pattern has formed near the resistance level.
Place a Sell order with your stop loss at or above the nearest high.
Calculate your position size, making the stop loss no more than 5% of your total deposit.
Set your take profit near a significant support level or hold the position as long as the downtrend continues.
Not trading advice. Consider your risks before making a decision.#harami #danmalikiTHEBBI #Thebbi