There are three main steps to keep in mind while identifying the bullish harami candlestick pattern in technical analysis. Firstly, investors and traders must look for the bullish harami at the end of a prolonged bearish trend. The bullish harami candlestick is always found a the end of a bearish trend and it signals a possible trend reversal. The image below represents the main steps in identifying bullish harami patterns.
Chart patterns, candle patterns, support and resistance levels, and other indicators should be used. If the price moves in your favor, follow the retracement with the Fibonacci levels. Similarly, close the position when the price breaks a key Fibonacci support level or when the exponential moving average is broken in the opposite direction of the primary trend.
A decreasing volume confirms a weakening bearish trend whereas an increasing volume confirms a weakening bullish trend. Some other indicators like MACD or RSI can be used for further confirmation. However, the subsequent small bullish candle, entirely engulfed by the previous candle, suggests a waning of bearish dominance. This shift implies that bulls are beginning to exert influence, potentially signaling a trend reversal. Secondly, investors and traders must spot the two candlestick pattern formation that satisfies the conditions of the bullish harami. The image below shows what investors and traders need to look out for while spotting a bullish harami.
In Japan, red has therefore been a forbidden color. In the Japanese social rank system, it was originally the color of “propriety”, or “propriety” ( 禮 , pronounced ray in Japanese).
Finally, and perhaps the most potentially confusing, the bullish harami and inside bar formations can look similar or even identical in some scenarios. First, while both patterns consist of a long-ranged first candle and a short-ranged second candle, the color of these candles is of secondary importance for the inside bar. This is because what determines its “bullish” or “bearish” nature depends on its position on the chart, not the color of its candlesticks. Despite being classified as a bullish pattern, the bullish harami lacks the “immediate” strength observed in other bullish reversal patterns.
Then, a short-bodied bullish candle gapped up after a long-bodied bearish candle, forming the bullish harami pattern. This pattern signaled the end of the pullback phase and the start of renewed bullish momentum as the upward price trajectory resumed. The image above shows an initial market downtrend as represented by the black downward arrow. The image shows the bullish harami pattern with the two candlesticks including the long bearish candle and short bullish candlestick following it. The image depicts that the bullish harami forms at the end harami candlestick of a prolonged bearish trend. The image above shows that the bullish harami signals a trend reversal from a bearish trend to a bullish trend.
Nathalie combines analytical thinking with a passion for writing to make complex financial topics accessible and engaging for readers. Between a Bearish Harami and a Doji, the Bearish Harami generally indicates a stronger bearish sentiment. Gordon Scott has been an active investor and technical analyst or 20+ years. It’s worth comparing the Harami patterns to the somewhat opposite Bearish Engulfing Pattern and the Bullish Engulfing Pattern.
Then you will have confidence to take the trade knowing your ratio of wins to losses. The EMA plus Fibonacci strategy is strongly profitable, but sometimes the fast EMA could knock you out of a winning trade relatively early. Bulls who have made gains in the stock may be taking a breather to either accumulate more shares or sell out of their existing positions. The large preceding candle would signify climactic conditions in that regard.
While both patterns are valuable for spotting trend reversals, the Bullish Engulfing pattern is generally considered a more decisive and reliable bullish signal. A Marubozu Candlestick pattern is a candlestick that has no “wicks” (no upper or lower shadow line). A green Marubozu candle occurs when the open price equals the low price and the closing price equals the high price and is considered very bullish. A red Marubozu candle indicates that sellers controlled the price from the opening bell to the close of the day so it is considered very bearish. According to the book Encyclopedia of Candlestick Charts by Thomas Bulkowski, the Evening Star Candlestick is one of the most reliable of the candlestick indicators.
This is because other candlestick patterns, such as the bullish engulfing, provide more decisive bullish trend reversals. One of the most flexible indicators, moving averages, can serve multiple purposes when a bullish harami pattern appears on the price chart. To illustrate, we observe a bearish trend (downtrend) preceding the candlestick pattern.
And here is another example where a bullish harami occurred, but the stoploss on the trade triggered a loss. The first candlestick is seen as the “mother” with a large real body that completely enclosing or embodies the smaller second candlestick, creating the appearance of a pregnant mother. While it’s easy to identify and provides clear entry points, confirming the signal with additional indicators for increased reliability is essential. To set profit targets using the Bullish Harami pattern, focus on key resistance levels or previous highs where the price is likely to encounter selling pressure. Trading the Bullish Harami candlestick pattern can be a game-changer if you know how to spot and confirm it correctly. Understanding this pattern can help your technical analysis while trading to increase profit and limit risks.
Harami is a type of Japanese candlestick pattern represented by two bodies, the first of them, larger, with black or red body and the second one, white or green. Its name derives from the Japanese word that means “pregnant” because the graphic that shows resembles a pregnant woman.
