- Sentiment: Bearish
- No. of candles: 2
- Direction: Reversal
What Is The Bearish Harami Japanese Candlestick Pattern?
The Bearish Harami pattern is a bearish reversal pattern that typically forms after an uptrend.
The Japanese candlestick pattern consists of two candles.
The first candle is a long white (bullish) candle, and the second candle is a small black (bearish) candle that is completely engulfed by the body of the first candle.
What Is The Psychology Behind The Bearish Harami Pattern?
The Bearish Harami pattern reflects a potential shift in market sentiment from bullish to bearish.
During the period of the first white candle, buyers are in control and push the price higher.
However, during the period of the second black candle, sellers step in and limit the price movement, causing the second candle to be engulfed by the body of the first candle.
This pattern indicates a possible loss of momentum for the bulls and hints at a potential trend reversal, as sellers attempt to regain control.
Japanese Candlestick Charting Techniques, Second Edition
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To trade the Bearish Harami pattern, wait for confirmation by a subsequent bearish candle or another technical indicator.
The sell trigger occurs when the price moves and closes below the low of the second black candle, confirming the pattern.
Place a stop loss order above the high of the second black candle to protect against potential false breakouts or reversals.
As the price moves in your favor, consider using trailing stops or other risk management techniques to lock in profits and minimize potential losses.
Additional Tips
While the Bearish Harami pattern can be a reliable bearish reversal signal, it is essential to use it in conjunction with other technical indicators and chart patterns to confirm the trend change.
Additionally, be aware of the overall market context and consider factors such as support and resistance levels, as well as the strength of the prevailing trend.
Keep in mind that no single pattern can guarantee a trend reversal, and proper risk management is always necessary.
Continue to learn about Japanese candlesticks through books, such as Steve Nison’s “Japanese Candlestick Charting Techniques” and “Beyond Candlesticks.”