What is a Harami Pattern?

What is a Harami Candlestick Pattern?

A harami is a two-candle pattern where a small real body forms entirely inside the range of the previous large candle. It signals that momentum is stalling and a potential reversal or pause may follow.

Structure of the Pattern

• First candle: A wide range candle that continues the current trend.
• Second candle: A small body that opens and closes within the prior candle's body.
• Bullish harami: Appears after a decline when a small green body forms inside a large red candle.
• Bearish harami: Forms after a rally when a small red candle sits inside a large green candle.

How to Trade Harami Patterns

• Map nearby support or resistance to frame the setup.
• Use trend filters like a 50-period moving average to stay aligned with the dominant bias.
• Combine with oscillators to confirm momentum divergence.
• Keep stops beyond the outer candle extremes to avoid being shaken out.

Deep Dive

Most edges come from applying clear rules consistently. Expand your analysis beyond a single signal: add context from higher timeframes, recent volatility, session behavior, and catalysts. Define invalidation so a trade becomes obviously wrong fast, keeping losses small while letting winners compound.

Trader Checklist

• Higher‑timeframe bias aligns with the setup.
• Clear level or zone for entry with confluence.
• Pre‑defined stop beyond structure; 2–3R target.
• Session/liquidity supports follow‑through.
• No imminent high‑impact news unless planned.

Strategy Ideas

• Combine structure with momentum confirmation (break/close/acceptance).
• Use partials: scale out at first target; trail remainder.
• Journal results by session and pair to refine timing.

Risks and Limitations

• Thin liquidity widens spreads and distorts signals.
• False breaks around obvious levels—wait for acceptance.
• Overfitting indicators; keep the process simple and robust.

Example

Map bias on the daily chart, mark a zone, and wait on 1H for a close back above with rising participation. Enter on the retest; stop beyond the invalidation wick; target prior swing with room for extension. Record the outcome and context to iterate.