What is a Harami Pattern?
Harami
Forex Trading Glossary
Quick Answer: A harami is a two-candle reversal pattern where a small candle is contained within the previous large candle's range, signaling potential trend exhaustion.
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.
Confirmation Matters
The harami signals loss of momentum, not an automatic reversal. Traders look for a break above the small candle in bullish setups or below it in bearish setups before participating.
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.
Related Terms
Learn More About Forex Trading
Now that you understand harami, explore our comprehensive guides: