Bearish Harami Candlestick Pattern

Definition

The Bearish Harami candlestick pattern is a two-candle reversal pattern. The first candle is a long bullish candle, and the second is a small candle (often bearish or small-bodied) that is completely contained within the body of the first candle. This pattern typically appears at the end of an uptrend and signals weakening buying pressure, preparing for a decline.

How to Identify

To spot a Bearish Harami, look for:

• A large bullish candle (long body, green or white) within a clear uptrend.
• A second candle with a small body (could be bearish, small bullish, or doji) that is completely inside the first candle's body.
• The shadows (if any) of the second candle do not extend beyond the first candle's body.

[diagram:generic-chart]

How to Trade

The Bearish Harami is a warning signal, not an immediate entry order. Trading steps:

• Confirm trend: Ensure the pattern appears in an uptrend.
• Wait for confirmation: After the second candle, wait for the third candle to close below the low of the second candle (or below the first candle) to confirm reversal.
• Enter short: When price breaks below the low of the second candle.
• Set stop loss: Above the high of the first candle (or above the second candle depending on strategy).
• Target: Measure from the pattern's high to the nearest support, or use support levels.

Real Example

Suppose EUR/USD is in an uptrend from 1.1000 to 1.1200. Day 1: a strong bullish candle closes at 1.1200. Day 2: a small bearish candle closes at 1.1190 and is completely inside the previous day's body. This is a Bearish Harami. If day 3 price falls below 1.1185, you can enter a short trade.

Common Mistakes

• Not waiting for confirmation: Entering immediately without a confirming candle often leads to losses.
• Ignoring the trend: The pattern is only meaningful in an uptrend; in a sideways market it can be a false signal.
• Not checking volume: Low volume on the second candle can reduce reliability.
• Setting stop loss too tight: Easily hit by market pullbacks. Place stop loss above the pattern's high.