Harami Candlestick Pattern: The Ultimate Guide

Harami Candle is a Japanese candle formation that can signal trend changes and offer cryptocurrency traders a good setting for risk-reward trading. The Harami Candlestick pattern is created with two candles, a very long candle followed by a much shorter candle.

Harami patterns can be found in any time frame. Therefore, selling them is relatively simple if you get to know them.

What is the pattern of the Harami candlestick? 

The Harami Candlestick Formation is an inverted pattern consisting of two candles. The first is a tall candle that continues the trend, and the second is a much shorter, contrasting color, which means a change in direction. The first candle's body should completely swallow the second candle's body.

Harami is a candlestick pattern in Japan, especially popular with cryptocurrency traders. It is easy to find and provides traders with relatively tight risk coverage. As a result, the Harami pattern is likely to offer an excellent risk-reward ratio when sold. 

"Harami" is a Japanese word that means "pregnant." This term makes it easier to understand what the Harami pattern suggests. Like a pregnant woman who gives birth to a new baby, the Harami model sets a new trend.

What does a Harami candle look like? 

Harami is a pattern of two candlesticks. The first is relatively tall, and the second is smaller. The whole body of the second candle must be inserted or filled by the first candle's body. 

You want to see a second candle smaller than half the size of the first candle. Here, the image of a pregnant woman makes sense: she is the first (tall) candle, and her baby is the second small candle, which consists of the first.

The critical difference is where the open second candle should rise in the opposite direction to the first candle. Inside the crypto, the holes are rare, so the patterns vary in appearance.

Importance of trading with Harami candle pattern

Harami candle patterns are a great way to find potential deals because they can be easily found by visually scanning the candle chart. While not all Harami candle designs will lead to a change, most of the changes will affect the Harami candle design, so this is a typical look at the charts. 

Most daily traders use the Harami candle pattern to indicate a strong trend in the following trading days. This will allow them to trade the momentary security price for those days.

Momentum as a trend trader has become one of the most popular trading strategies in today's trading. This allows day traders to use other risky strategies with reasonable confidence that the price will eventually turn around in the short term, even if a trader is against it. 

The indication of the Harami candle pattern should be followed by further analysis before using it as a factor when entering the trade market. This analysis may include additional guidance, an overview of any relevant reports or information, or a more fundamental analysis of the financial statements of the shares.

How can you identify the bullish Harami pattern? 

Now that you know the theory of Harami formation, it's time to see how that formation is identified. We were looking for two candlesticks, one large body selling a candle and one miniature body trading a candle.

It's a simple candle pattern to find; this is what it looks like. The lines of the body of the small candle should also be inside the first one. Most people say no, but based on my experience, it helps to validate companies better. 

Instead of having the second candle fully present in the first, you will find that it is always equivalent to closing the first candle itself.

What is the bullish Harami pattern?

The Bullish Harami candle is created when a large red bear appears on Day 1, followed by a small bear the next day.

It should be mentioned that an essential aspect of a strong Harami is that prices should be distributed on day 2. The price is limited by buyers and does not fall close to a bear end on day 1. What is the Bearish Harami Pattern?

The Harami bear candlestick is formed when there is a big bull candle on day one, followed by a small bear candle on day 2. It should be noted that an essential aspect of the Harami bear candlestick is that prices rose on day two and also could not return higher to the end of day 1.

This suggests that there is uncertainty about the continuation of the continuing trend.

Does using a Harami pattern guarantee accuracy? 

Keep in mind that not all actions will work in your favor. It is unreasonable to expect all your businesses to be profitable. The same logic can be applied to the Harami pattern.

While the Harami pattern is easy to find and can generate winning trades with a good risk-reward ratio, this does not mean that every trade is a guaranteed winner. Therefore, we recommend using a 1: 2 risk/reward ratio in the above business plans. 

This way, you can be right in less than half an hour but still give yourself a chance to expand your account because your winning trades are more significant than your losing trades.

What does the Harami pattern tell to traders?

Selling a second or certified candle is an essential tool. A small candle indicates whether traders should consider the change a continuation. When it comes to technical analysis, the Harami pattern is trendy. 

This is mainly due to his ability to show change quickly. It always happens at the right time, accompanied by a strict risk. Thanks to this timely indication, traders can use more valuable risk-reward ratios. This is a massive advantage from which they can benefit enormously.

Harami's candlestick analysis allows you to identify the current downtrend quickly. This will enable traders to look for delays or changes in momentum signals.

In technical analysis, it is always essential to make sure that the size of the small candle does not exceed 25% of the large candle. During the process, it is seen that the very bull candle is surrounded by the body of the previous bear candle.

How do you trade when you see Harami values?

The next day harami is bullish; when the price increases, it may indicate time to buy. Therefore, when a vital Harami principle means that the connection of this system is standard, it can be interpreted as a buying signal.

On the other hand, it may be time to sell the day after the bearish Harami if more prices are falling below the high support level. Therefore, it may be a possible sell signal when the destruction of the trendline and bearish barrier values are seen together. 

Therefore, a Bullish Harami is a change of values. It is usually printed after a downtrend. On the other hand, the bearish barrier is also a variable.

During this time, it usually stays when the surface is updated. It is always a good business plan to show any brand and other business brands interacting (discontinuation of this process may be one of them). 

What are its strengths and weaknesses?

One of the significant advantages of the Harami candle pattern is that they allow customers to benefit from large movements, including high wages, in an accident.

Harami type is used in many places because it allows customers to take advantage of price changes at the best time, including at high risk.

Like any other standard candle pattern, the Harami principle also has weaknesses. Harami lamp designs are not uncommon. This is the most common in Forex, as it is a 24-hour free trade zone in trading.

When a hole appears, it is usually at the opening of the new week, so Harami and Forex are featured on the weekly chart. Therefore, Harami trading in Forex is generally looking for a long-term approach to trading, as weekly charting and charts take weeks and months.

In marketing, for example, Harami is often used because the slots are part of the daily shopping process. Still, it is a mighty light bulb when detected in the forex market. As with any lamp design, it is wise to use it with other museums to improve its reliability. 

For example, if you want to trade bearish bias, you can use the Relative Strength Index (RSI) or Stochastic Oscillator to increase your chances of success.

Harami candlestick's powerful trading strategies 

Now that we've covered the basics of Harami candlestick pattern design, it's now time to step into these trading strategies. Let's highlight a few below:

Bullish Harami and volatility filter

We have talked about improving the bullish pattern by keeping changes in mind in the past. This is also what we do with this plan.

To ensure that we only take the bullish bar when the high is high, we will use the ADX symbol. ADX is one of our favorite shows that we believe works well with many business plans. We need ADX higher than 20 to filter the low signal to raise the movement.

Regarding the settings shown, we will use 10 lengths. We have found that settings under 14, default settings, sometimes work well. That's why we went with a short foundation!

Bullish Harami and RSI

The bullish trend occurs after the fall and becomes increasingly important as the market declines.

We may want to introduce some filter that tells us when the product is being marketed and can be revived. The filter we choose to use is the RSI symbol. We have gained a great deal of experience in this and our other initiatives. 

To complete the trade, we will need a 5 RSI below 30.

Bullish Harami and Average Reversal

Since the bullish trend should occur when the market falls, it should be trading below the short moving time.

Now, that means we can use the moving average as a kind of profit objective. In other words, we will exit the trade as soon as the price crosses the moving average from below.

Ways to improve Harami candlestick pattern accuracy

Currently, most vendors use strong Harami additional conditions and filters to enhance pattern accuracy! In short, patterns like the bull's Harami should be seen as small indicators of where the price is going, which should be confirmed in other respects.

In this section, we want to show you some of the different methods we use to improve the accuracy of other patterns.

Use of seasonality

There are many seasonal effects in the markets. For example, a day of the week may be stronger or bearish than one-third of the month in some markets.

Now that you know these opportunities, you can consider them in your analysis. For example, a bull Harami created on a more vital day may not be as accurate as a Harami made on a bear day.

A positive hole and a strong candle can only result from much stronger sentiment and only a short retreat instead of a fashion change.

We have always used seasonality in our store and have had great success!

See Bar Ranges

Sometimes a pattern created with high volatility is more reliable than a pattern created under low volatility conditions. What fully works best depends on the market and time frame in which you sell, and you should try to figure out what works best for you.

An easy way to measure the strength of a trend is to look at the rows of candles. If the Harami bear candles are tall and large compared to other sticks, you know the market is strong and determined to move higher.

In contrast, if the patterned candles are small and unimportant compared to other candles, this is a sign that the entire trend is weak and can be easily broken. Therefore, another way to measure the accuracy of a bull Harami is to compare the order of the pattern itself with the surrounding candles.

For example, if the first bear candle is more extensive and the hole leading to the bull candle has a vital dimension that tells us that the market has gone through what may be the last explosion to change fashion.

Use volume

Quantities have proven helpful many times over in our marketing strategies. Unlike a price chart, which only tells how the market is moving, a volume chart also provides indicators of market confidence. So it can be said that it adds a second layer to our store, which will help us display details that we would not otherwise notice!

Usually, you compare the pattern number with the number of surrounding bars. This way, you can understand how many market participants have created the pattern. In general, the larger the volume of a pattern, the more important it is!

You can also look at the number of individual candles containing a bull Harami pattern. For example, if the number of bear candles is too high, it could mean an absolute explosion, as we discussed earlier.

Related Questions - FAQ

What does a Harami candle show? 

The bull harami is a candlestick indicator used to show bearish reversals. This is usually indicated by a slight price increase (indicated by a white candle), which may be within a given stock price decline (indicated by black candles) over the last two days.

How do you use Harami candles?

The Harami Candlestick Formation is an inverted pattern consisting of two candles. The first is a tall candle that continues the trend, and the second is a much shorter, contrasting color, which means a change in fashion. The first candle's body should completely swallow the second candle's body.

How reliable is bullish Harami?

The validity of Bullish Harami, like all other forex candle patterns, depends on the price action around it, the indicators where it appears in the trend, and significant levels of support.

How can you say Harami is a bear?

The bear Harami is a Japanese candlesticks pattern with two stripes, indicating prices will soon return to the bottom. The pattern consists of a tall white candle followed by a small black candle. The opening and closing price of the second candle must be in the body of the first candle.

Bottom line

Cryptocurrency traders generally follow Harami candle designs. As a result, the Harami pattern often occurs in crypto markets, and the marketing process is simple.

Entrepreneurs benefit from the tight risk coverage and good reward potential offered by the Harami model. However, the standard does not guarantee winning trades like all other technical analysis tools. 

For best results, it is essential to look for the Harami pattern in the right trend and combine its use with a few other trading tools.