The Bullish Harami is a two day pattern bullish reversal pattern. A long black or green candle followed by a small candle distinguishes this pattern. The second day white real body must reside within the first day black real body.
- A downtrend must be in process
- The first candle is black (green), reflecting the continuation bearish mood
- The second day is a short day and must be white (red) in color.
A harami is normally viewed as indecision day. The western pattern equivalent is an inside day. After a strong downtrend (green candle), the bearish are not selling down any further on the second day, hence the higher opening and closing on the second day. Its short white candle reflects this indecision on the second day. This pattern hint of a market reversal to the upside.
The bearish harami is a two day bearish reversal pattern. A long green candle followed by a small red candle distinguishes this pattern. The second day’s green real body must reside within the first day’s red real body.
- An uptrend must be in progress
- The first candle is green, reflecting the continuing bullish mood
- The second day’s candle gaps below the previous close on the opening, trades and close within the first day’s green real body
- The second day is a short day and must be red in color.
Just like Bullish Harami, it is interpreted as indecision. Western called them as “inside” day.
So how to use this sign?
Since it is a possible bullish reversal, confirmation is required. Buy if there is a bullish confirmation candle that close above both two candle. Otherwise, the downtrend is continue. Sell if there is a bearish confirmation candle that close below those two candle. Otherwise, the uptrend is still continue. Refer to the picture below for better understanding.