What is a Harami Pattern?

The Harami candlestick formation signifies either a down trend that is about to end or an up trend that is also about to finish. It represents a reversal pattern that consists of two candles with different body sizes. The first one is longer, whereas the second one is completely engulfed by body of the first candle.

The smaller the body of the second candle the stronger the reversal signal. Additionally, the accuracy of the reversal signal is increased further as the wicks of the second candle decrease.

Under the conditions of a rising market, if the second candle is near the top of the first candle, this indicates that a consolidation is more likely to occur than a reversal.

On the other hand, under the conditions of a down market, a hovering near the bottom of the first candle second candle signifies that a consolidation is more likely to occur.

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