How to Trade the Bullish Harami Pattern

The second candle should be around 25% of the length of the previous bearish candle. The chart above shows the combination of bullish harami formed in support of previous price actions. The formation of the harami candle pattern at the support gives more accuracy to price reversal for the ETHUSD pair on the one-hourly timeframe. The first candle is usually long, and the second candle has a small body. The second candle is generally opposite in colour to the first candle.

Just as before, selling pressure is high and pushes the market even lower. In Chart 2 above, a buy signal could be triggered when the day after the bullish Harami occurred, the price rose higher and closed above the downward resistance trendline. A bullish Harami pattern and a trendline break is a combination that could result in a buy signal. A candlestick chart typically represents the price data of stock on a single day, including opening price, closing price, high price, and low price. HowToTrade.com helps traders of all levels learn how to trade the financial markets. In the chart below, we have drawn Fibonacci retracement levels from the highest to lowest prices of the previous trend.

What Is The Bullish Harami Candlestick Pattern?

Watch this video to learn more about how to identify and trade the bullish harm pattern. Asktraders is a free website that is supported by our advertising partners. As such we may earn a commision when you make a purchase after following a link from our website. Pivot Points are automatic support and resistance levels calculated using math formulas.

For example, if the volume of the bearish candle is very high, it might indicate a final blowoff, as we talked about before. The second Harami pattern shown in Chart 2 above is a bearish reversal Harami which could also trigger a buy signal. Day 2 showed a bearish candlestick which made the bearish Harami look even more bearish. The tall black candle speaks of a continued downward price trend but the next day, a white candle appears.

How Reliable Is The Bullish Harami Candlestick Pattern?

The 1st candle will always be the colour of the prior trend and the second candle will be the reversal candle. My book,

Encyclopedia of Candlestick Charts,

pictured on the left, takes an in-depth look at candlesticks, including performance statistics. Everything that you need to know about the Bullish Harami candlestick pattern is here. As the trend reversed put a stop loss at the bottom of the bullish harami. If we are in a downtrend, then we are looking for a reversal pattern.

• The prior trend should be bearish, but in this case, the prior trend is almost flat, which prevents us from classifying this candlestick pattern as a bullish harami.
• Eventually, the trend reversal is confirmed and the price changes direction.
• Losses incurred in connection with trading stocks or futures contracts can be significant.
• It has an opposite version of the candlestick formation called a bearish harami pattern.
• A bullish Harami pattern indicates an upward price reversal, whereas the bearish Harami pattern indicates a downward price reversal may be possible.

This means traders could have established short positions in the asset, with stop-loss orders placed above the high of the first candlestick in the Harami pattern. Under this scenario, traders could have captured significant gains while experiencing little to no drawdown on short positions. Since these patterns occur in relatively high frequencies, traders can implement Harami trading strategies as part of a consistent repeatable strategy to capture profits. The bearish harami can lock in profits for long positions during uptrends, as it suggests that the uptrend may end. The second bearish candle confirms that the high on the chart may be in for now. A short position trade can be taken at the end of the second bearish candle signal, with a stop loss on the move above that bearish candle.

Candles’ Colors

The bullish harami candlestick pattern is certainly a useful indicator to identify price trend reversals. In most cases, when the pattern appears in its perfect formation, the price usually reverses and the pattern is accurate and reliable. Instead, it’s best to add other technical indicators to confirm the reversal and find entry levels, stop loss and take profit orders. The bullish harami candle pattern is a simple and frequently used pattern by traders to spot reversal and ride early uptrend for higher and quick profit gains. Let us see how we can trade the bullish harami pattern with other trading strategies and indicators.

Get ready to receive three amazing chart pattern videos that are over 30 minutes long straight into your inbox. If you are day trading, the Daily Pivot Points are the most popular, although the Weekly and Monthly are frequently used too. What makes a pattern valid is not just the shape, but also the location where it appears. The pattern generated 23 pips, which isn’t bad, especially considering the risk outlay.