What Is a Bearish Harami Candlestick?
A Bearish Harami is a two-bar Japanese candlestick pattern that signals a potential reversal of an uptrend to a
downtrend. The name "harami" comes from the Japanese word for "pregnant," as the pattern visually resembles a
pregnant woman.
Here's the breakdown of what this pattern signifies:
- First Candle: A large bullish (green or white) candle that shows strong buying pressure and a continuation
of the existing uptrend.
- Second Candle: A small bearish (red or black) candle that is completely "contained" or engulfed within the
body of the first candle. The high and low of the second candle are within the open and close of the first.
The psychology behind the pattern suggests a shift in market sentiment. The first large bullish candle indicates
that buyers are still in control. However, the second, small candle reveals a significant loss of bullish
momentum. This hesitation from buyers and the emergence of sellers, albeit in a small range, can be a warning sign
that the uptrend is running out of steam.
Traders often look for this pattern at the top of an uptrend or near a resistance level. While the pattern itself
is a reversal signal, it's generally considered more effective when confirmed by other indicators or a subsequent
down day that breaks below the low of the harami pattern.