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Forex Glossary

Harami

 

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

Related Terms

Stick Sandwich

A stick sandwich is a candlestick pattern that consists of three candles. The central candlestick will be colored in the opposite way from the candlesticks on either side of it,...

Three Black Crows

The Three Black Crows is a candle stick pattern that indicates a strong downward trend. It consists of three consecutive bearish candles with long lower shadows and small bodies. The...

Three White Soldiers

The Three White Soldiers is a  pattern that consists of three consecutive bullish candles with long bodies and short upper shadows. The "white" in the name refers to the fact...