Understanding these advanced variations allows traders to fine-tune their approach and adapt to different market conditions. Traders should consider confirming signals from other technical indicators or chart patterns, as well as overall market conditions, timeframe, and the presence of significant news or events. “Harami” means pregnant in Japanese, indicating that the pattern represents a small candlestick within the body of a larger candlestick. Price Action traders consider the pattern as a reliable confirmation point for upward price trends. Therefore, using this candlestick pattern combined with price trend indicators will give the most effective entry points. Once you have identified a potential harami candlestick pattern, you will want to wait for the market to confirm the reversal.

All ranks are out of 103 candlestick patterns with the top performer ranking 1. “Best” means the highest rated of the four combinations of bull/bear market, up/down breakouts. Traditional traders enter short on a break of the high of the second doji candle and place a stop loss below the low of the first large candlestick. The first candle engulfs the second one, being bullish harami a doji candle, including shadows. Nonetheless, when you are able to find the boundaries of the previous trend, Fibonacci support and resistance levels can help you confirm the trend reversal and find the right entry level. A candlestick chart typically represents the price data of stock on a single day, including opening price, closing price, high price, and low price.

The pattern indicates that sellers are back in control and that the price could continue to decline. Bullish patterns indicate that the price is likely to rise, while bearish patterns indicate that the price is likely to fall. No pattern works all the time, as candlestick patterns represent tendencies in price movement, not guarantees. Bar charts and candlestick charts show the same information, just in a different way.

Ways to Improve the Accuracy of a Bullish Harami

We’re going to cover its meaning, how you can improve its accuracy, and provide some examples of trading strategies that rely on the bullish harami pattern. ​A bearish engulfing pattern develops in an uptrend when sellers outnumber buyers. This action is reflected by a long red (black) real body engulfing a small green (white) real body.

In the chart below, we have drawn Fibonacci retracement levels from the highest to lowest prices of the previous trend. Moreover, the stop-loss could be placed at the 78.6% level and the take profit target at 50%, and 38.2%. If traders receive enough confirmation, they will most likely buy the security with the hopes the new upward trend continues and their investment grows. Therefore, traders need to use some other method of determining when to exit a profitable trade.

The best percentage move 10 days after the breakout is a rise of 4.52% in a bear market. I consider moves of more than 6% to be good, so the post breakout trend is weak. This is important to qualify as a Harami cross–the smaller the real body, the better it is.

The name “Harami” comes from Japanese and means pregnant due to the fact that the formation is similar in appearance to a pregnant woman. There are two types of Harami candle patterns, the bullish and bearish harami candlestick pattern. This subheading explores how traders can incorporate volume data when interpreting harami crosses. Understanding the relationship between price action, the size of the candles, and trading volume can offer a more comprehensive picture of market dynamics.

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The bearish harami pattern occurs in an uptrend, with the first candle being a bullish green candle followed by an engulfed doji. Many candlestick patterns have similar candlesticks to the bullish harami cross. It’s essential to understand the differences between these related patterns when using candlestick pattern technical analysis.

Recognizing a harami cross signals a potential shift in market sentiment, prompting traders to manage emotions and execute well-informed trades. Crypto traders, much like their counterparts in traditional markets, may use the bullish harami cross as a strategic signal. Confirmation through a subsequent price rise becomes crucial in navigating the volatile cryptocurrency landscape. This example showcases the universal applicability of the harami cross pattern across different asset classes.

How to Identify the Bullish Harami Cross Candlestick Pattern

For a bullish harami cross, some traders may act on the pattern as it forms, while others will wait for confirmation. In addition to confirmation, traders may also give a bullish harami cross more weight or significance if it occurs at a major support level. If it does, there is a greater chance of a larger price move to the upside, especially if there is no nearby resistance overhead. In technical analysis, Bullish Harami candle is known as a preferred signal, having high accuracy in catching the big uptrend of prices.

Harami cross in different timeframes

Traders use the candlesticks to make trading decisions based on regularly occurring patterns that help forecast the short-term direction of the price. Falling Window patterns stops the bulls for a while and price moves sideways. Finally price breaks out upward thanks to a Rising Window pattern, occurring at a high trading volume. The bulls however are not strong enough and stock moved sideways and then downward.

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Some benefits of the harami cross strategy include attractive entry levels for investments as the trends potentially reverse upwards. The movement is more straightforward to spot for beginner traders than many alternatives, providing a more attractive risk-reward ratio for many of its users. The performance of the harami cross pattern in volatile markets can vary. Traders should be aware of the impact of volatility on the pattern’s reliability and adjust their strategies accordingly. Understanding how the harami cross behaves in different market conditions is essential for effective application. The behavior of the harami cross can vary across different timeframes.

Harami is derived from the Japanese word “pregnant”, where the first candle is the mother candle and the second child candle is within the body of the first – otherwise known as engulfed. The opposite of the Bullish Harami is the Bearish Harami and is found at the top of an uptrend. Gordon Scott has been an active investor and technical analyst or 20+ years.

This is followed by three small real bodies that make upward progress but stay within the range of the first big down day. The pattern completes when the fifth day makes another large downward move. It shows that sellers are back in control and that the price could head lower. For example, candlesticks can be any combination of opposing colors that the trader chooses on some platforms, such as blue and red. A Bullish Harami Cross is followed by a Takuri Line formed by a High Wave basic candle. The Takuri Line cannot be regarded as a confirmation of the Bullish Harami Cross.

Intermarket analysis: Applying harami cross across assets

The only difference is that the bearish harami pattern appears at the end of an uptrend and has the opposite outcome that the bullish harami setup. Stops can be placed below the new low and traders can enter at the open of the candle following the completion of the Bullish Harami pattern. Since the Bullish Harami appears at the start of a potential uptrend, traders can include multiple target levels to ride out a new extended uptrend. These targets can be placed at recent levels of support and resistance. The Bullish Harami candle pattern is a reversal pattern appearing at the bottom of a downtrend.

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