How to catch tops and bottoms with Harami pattern


Harami featured image

The Harami pattern is found in the Japanese candlesticks chart. Its name in Japanese means a pregnant woman. It has the form of two consecutive candles, one big and the second small. The pattern indicates the possibility of a change in a trend.

Harami candlestick pattern
Harami candlestick pattern

The Harami pattern, as I already mentioned, consists of a pair of candles. It usually proclaims the current trend is going to an end.

The first Harami candle is long and it is in green color in the case of the uptrend, and in red in case of the downtrend.

The second Harami candle is short and in the color opposite to the first one. It means it will be a short reddish candle when there was an uptrend, and a short bullish one when there was a downtrend.

Harami means pregnant woman
Harami means a pregnant woman

Reading the Harami pattern

In a continuing trend, the candles are of the same color. When there is a long candle, the trend is strong. But whenever a candle in different color appears, it might be a signal of the change in the trend. In the Harami pattern, this candle of the opposite color is significantly shorter than the one before. Moreover, it usually unfolds within the body of the one previously made. Whenever you notice Harami candles, the reversal of the trend is very much likely. The other choice is inevitable price correction before the market continues in the former direction.

Trading with Harami pattern on the Olymp Trade platform

Harami on IBM daily chart
Harami on IBM daily chart

Because of the uncertainty, if Harami candles represent the trend reversal or price correction, it is best to use the described pattern for long term trading. In the above chart example, the chosen timeframe is 1 day. The most reasonable moment to enter the position is the development of the third, green candle. That candle clearly shows the trend will go up. The trading interval should be 1 day.

You have now the necessary knowledge about the Harami pattern so it is time to put it into practice. Try it on the free Olymp Trade demo account before you go real. Just be extremely careful of your trades, as there isn’t any risk-free strategy and you will most likely incur losses along the way. Always be prepared to deal with things that aren’t going according to plan.

We would be happy to hear from you. Kindly use the section for comments down below.

Best of luck!

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Bart Bregman

Full time day trading, and helping out with Olymp Trade wiki in my spare time to create an awesome platform for beginners. I'm a digital nomad that travels the world while working from everywhere!

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