Bearish Harami |
Characteristic of Candlesticks: Reversal
Relevance of Candlesticks: Bearish
Prior Trend of Candlesticks: Bullish
Reliability of Candlesticks : Confirmation Required
Confirmation of Candlesticks: Suggested
Candlestick Patterns Key Reference |
DESCRIPTION
Bearish Harami pattern is a two candlestick formation.
Bearish Harami pattern is recognized by a small bearish candlestick real body which contain within the previous long bullish candlestick real body.
"Harami" in Japanese means "Pregnant". The long bullish candlestick is "The Mother" and the small candlestick is "The Baby".
PATTERN RECOGNITION
1. Bearish Harami pattern can be identified by an uptrend.
2. Refering to above diagram, we will firstly see a long bullish candlestick.
3. Then we will see a following small bearish candlestick where the its real body is completely engulfed by the real body of the first long bullish candlestick.
The upper and lower shadows of the second candlestick are not required to be contained within the first candlestick's body, however it will be preferable if they are.
EXPLAINATION
The Bearish Harami pattern is a sign of trend reversal.
While the market is in an uptrend, there is a strong buying force reflected by a long bullish candlestick body.
However it is followed by the second small bearish candlestick's body. This signal a trend reversal since the small bearish candlestick's real body indicate that the bullish momentum starts to weaken.
The Consolidation Patterns imply that the trend may have ended and may go sideways. There is a possibility of a reversal but would require confirmation in the next session.
POINT TO NOTE
The actual fact about Bearish Harami pattern is that the second bearish candlestick has a small real body which its real body is completely engulfed by the prior candlestick.
The Bearish Harami pattern does not necessarily mean that a downtrend will follow.
The market normally enters into a congestion phase followed by a bearish harami pattern.
We need a third bearish candlestick with a large gap down or by a lower close as a confirmation to be sure that the uptrend has reversed.
CANDLESTICK PATTERNS KEY REFERENCE
Irrespective of Color (Can be bullish or bearish) |
Uptrend |
Consolidation |
Downtrend |
ANTICIPATED DIRECTION OF TREND
Lighter Arrow = Lower Probability
Solid Arrow = Higher Probability
More Likely to go sideway, Less likely to rally
|
More likely to rally, Less likely to go sideways
|
More likely to go sideway, Less likely to fall
|
More likely to fall, Less likely to go sideways |
