The Harami is a Japanese candlestick pattern that may indicate a reversal, and it consists of a large candlestick followed by a smaller candlestick whose move is opposite to the previous one and its body and shadows is completely within within the vertical range of the previous larger candlestick. In Japanese, Harami means pregnant.
The bullish Harami is a downward black-colored candlesticks followed by a small white candlestick, which gives a sign of a reversal of the current downward trend. The smaller the second white candlestick, is the more likely the reversal.
The bearish Harami is an upward white-colored candlesticks followed by a small black candlestick, which gives a sign of a reversal of the upward trend. The smaller the second black candlestick, the more likely the reversal. The bullish Haramy has have to appear at market bottoms and and bearish Harami have to appear at market tops to indicate a reversal, otherwise, they will not hold any meaning
The bullish and bearish Harami are very powerful candlestick shapes and they are excellent confirmation signals when used with other chart patterns and technical indicators, like deviations in the RSI or crossovers in the MACD. They are a very important trading tools in FXLORDS’ services; Managed Forex Accounts, Forex Trading Signals, and it is among subjects discussed in the Training Course.
The most important characteristic that helps recognize a bullish Harami is that the price gaped up on the second time period, and was unable to move lower than the close of the first time period. Similarly, the bearish Harami is identified after the price gaped down on the second time period, and was unable to move higher than the close of the first time period.