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Harami: Gapped Down

The Harami candlestick pattern is a two-day reversal pattern consisting of a large bullish or bearish candlestick on the first day followed by a smaller bullish or bearish candlestick on the second day. A bearish Harami occurs after a large bullish candle and signals a potential trend reversal, while a bullish Harami follows a large bearish candle and indicates the trend may reverse to bullish. The document provides examples of both patterns in a Nasdaq chart and describes how confirming signals like trendline breaks can strengthen the reversal implications.

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439 views2 pages

Harami: Gapped Down

The Harami candlestick pattern is a two-day reversal pattern consisting of a large bullish or bearish candlestick on the first day followed by a smaller bullish or bearish candlestick on the second day. A bearish Harami occurs after a large bullish candle and signals a potential trend reversal, while a bullish Harami follows a large bearish candle and indicates the trend may reverse to bullish. The document provides examples of both patterns in a Nasdaq chart and describes how confirming signals like trendline breaks can strengthen the reversal implications.

Uploaded by

kosurug
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd

Harami

The Harami (meaning "pregnant" in Japanese) Candlestick Pattern is a reversal pattern.


The pattern consists of two Candlesticks:
 Larger Bullish or Bearish Candle (Day 1)
 Smaller Bullish or Bearish Candle (Day 2)

The Harami Pattern is considered either bullish or bearish based on the criteria below:

A bearish Harami occurs when there is a large bullish green candle on Day 1 followed by
a smaller bearish or bullish candle on Day 2. The most important aspect of the bearish
Harami is that prices gapped down on Day 2 and were unable to move higher back to the
close of Day 1. This is a sign that uncertainty is entering the market.

In contrast, a bullish Harami occurs when there is a large bearish red candle on Day 1
followed by a smaller bearish or bullish candle on Day 2. Again, the most important
aspect of the bullish Harami is that prices gapped up on Day 2 and price was held up and
unable to move lower back to the bearish close of Day 1.

The chart below of the Nasdaq 100 E-mini Futures contract shows an example of both a
bullish and bearish Harami candlestick pattern:
The first Harami pattern shown above on the chart of the E-mini Nasdaq 100 Future is a
bullish reversal Harami. First there was a long bearish red candle. Second, the market
gapped up at the open. In the case above, Day 2 was a bullish candlestick, which made
the bullish Harami even more bullish.

Buy Signal

A buy signal could be triggered when the day after the bullish Harami occured, price rose
higher, closing above the downward resistance trendline. A bullish Harami pattern and a
trendline break is a potent combination resulting in a strong buy signal.

The second Harami pattern shown above on the chart of the E-mini Nasdaq 100 Future is
a bearish reversal Harami. The first candle was a long bullish green candle. On the
second candle, the market gapped down at the open. The chart above of the e-mini shows
that Day 2 was a bearish candlestick; this made the bearish Harami even more bearish.

Sell Signal

A sell signal could be triggered when the day after the bearish Harami occured, price fell
even further down, closing below the upward support trendline. When combined, a
bearish Harami pattern and a trendline break is a strong indication to sell.

A somewhat opposite two candlestick reversal pattern is the Bearish Engulfing Pattern
(see: Bearish Engulfing Pattern) and the Bullish Engulfing Pattern (see: Bullish
Engulfing Pattern).

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