All ranks are out of 103 candlestick patterns with the top performer ranking 1. „Best“ means the highest rated of the four combinations of bull/bear market, up/down breakouts. This pattern indicates a possible loss of momentum for the bulls and hints at a potential trend reversal, as sellers attempt to regain control.

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Moving averages are also helpful in confirming the trend direction and strength. At the same time, check the RSI to see if it’s moving up (below 30), which suggests the market is recovering from oversold conditions. Usually, the second candlestick will be the opposite color of the first candlestick, but not always. The Japanese yen remains under pressure, trading near a five-month low against the US dollar. This trend is primarily driven by differences in monetary policy approaches. Now that we are short Citigroup, we wait for an opposite signal from the stochastic.

Once again, the doji must be contained within the real body of the prior candle. Bearish harami pattern’s effectiveness as a solo technical tool is low compared to other technical indicators. As a result, traders prefer using additional technical tools to increase the effectiveness of their analysis.

Investors seeing this bullish harami may be encouraged by this diagram, as it can signal a reversal in the market. The bullish harami indicator is charted as a long candlestick followed by a smaller body, referred to as a doji, that is completely contained within the vertical range of the previous body. The first Harami pattern shown on Chart 2 above of the E-mini Nasdaq 100 Future is a bullish reversal Harami. In the case above, Day 2 was a bullish candlestick, which made the bullish Harami look even more bullish.

The following chart shows a bearish harami cross in American Airlines Group Inc. (AAL). The price had been falling in an overall downtrend, but then flattened out into a large range. The price moved higher into a resistance area where it formed a bearish harami pattern. This provided confirmation and an opportunity to exit longs or enter short positions. A harami cross is a Japanese candlestick pattern that consists of a large candlestick that moves in the direction of the trend, followed by a small doji candlestick.

1. The EMA plus Fibonacci strategy is strongly profitable, but sometimes the fast EMA could knock you out of a winning trade relatively early.
2. A bullish harami is made of a large bullish candlestick that is followed by a small bearish candlestick.
3. As RSI trends upward following the pattern, downside exhaustion, and emerging upside strength is implied.
4. A bearish hammer candlestick pattern indicates a potential bearish reversal in the market.
5. The Bullish Harami pattern, a distinctive two candle pattern, frequently heralds a potential shift in market direction.

The main disadvantage of the bullish harami candlestick is the need to wait for the trend reversal confirmation. The third step for investors and traders is to confirm the trend that the bullish harami indicates. The bullish harami pattern, in most cases, gives a trend confirmation in the harami candle third or fourth candlestick. The image below depicts trend confirmation in a bullish harami candlestick pattern.

The best place to set your stop-loss is just below the lowest point of the second, smaller candle in the pattern. This level is typically near the recent low of the downtrend, offering a logical point to exit if the market continues to move against your position. The price action strategy option should always be included in our analysis because the harami candle is a price action component. If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on.

1. After harami forms, traders can connect the high/low of the large bearish candle that preceded it.
2. The image below shows an example of a bullish harami candlestick pattern used in trading.
3. Again, the most important aspect of the bullish Harami is that prices gapped up on Day 2 and the price was held up and unable to move lower back to the bearish close of Day 1.
4. Secondly, investors and traders must spot the two candlestick pattern formation that satisfies the conditions of the bullish harami.
5. The price breaks the yellow support in a bearish direction giving us the confidence to hold our short position.
6. The Bullish Harami Cross is also a candlestick pattern indicating a reversal in a downtrend.

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The second main disadvantage of the bullish harami pattern is that it is not advisable to use this pattern in isolation. The bullish harami pattern can give false positive signals sometimes which could lead to losses if not used along with other technical indicators. A bearish harami is a two-bar Japanese candlestick pattern that indicates a price reversal is imminent. A tall white candle is followed by a little black candle in this arrangement.

Why Are Volume and Movement Important for Bearish Harami?

Fibonacci shows retracement levels where the price will tend to revert frequently. It’s simple, the Bullish Harami pattern is traded when the high of the last candle is broken. When trading the Bullish Harami, we want to see the price first going down, making a bearish move. The pattern is bullish because we expect to have a bull move after the Bullish Harami appears at the right location.

You can examine how to analyse bull and bear harami setups on charts of different assets and on different timeframes for free using the FXOpen TickTrader platform. The best average move 10 days after the breakout is a rise of 4.05% in a bear market. The move also gives a 10-day performance rank of 45, whichis mid list between 1 (best) and 103 (worst).