The Harami candlestick pattern

The Harami candlestick pattern is a reversal pattern. It consists of two different candlesticks and is considered accurate by many traders.

The pattern can either be a bullish pattern or a bearish pattern based on the previous trend. The first candlestick continues in the same direction as the trend. In this example it is a bullish candlestick.

The first day should be a big move. The second day should be a smaller candlestick that opens up lower than the previous day’s close and does not go above the previous close. It is a much smaller candlestick.

After this 2nd day it is likely that the given security is going to reverse trends, in this case head down. There is some dispute about if the 2nd candlestick needs to be a different color then the first, but if it is it offers a stronger signal.

Below is an example of what a hamari candlestick pattern looks like.

Tip this is not a standalone indicator. In fact if the trend is strong enough this pattern might just be a short term correction. For that reason professional investors will use this indicator in combination with other indicators such as support and resistance in order to help them better estimate whether the stock is likely to go up or down.

Other Candlestick Patterns

By learning the other candlestick patterns that are in the market you can better estimate what a given stock is likely to do in the market. Here are a few major patterns that traders will look for.

Dark Cloud Cover - A 2 day reversal pattern

Bearish Tri Star - A bearish reversal pattern

Side by Side White Lines – A 3 day bearish reversal signal