Definition

The Harami Cross is a two-candle reversal pattern: the first candle has a large real body (bullish or bearish), and the second candle is a Doji (very small or no real body) that sits entirely within the body of the first candle. The name "Harami" comes from Japanese meaning "pregnant," as the Doji is contained within the mother candle.

How to Identify

First candle: large real body, showing strong momentum (up or down).

Second candle: Doji (open and close nearly equal), completely inside the first candle's body (including shadows).

Volume often decreases on the Doji, indicating hesitation.

Meaning

The Harami Cross signals weakening of the current trend. After an uptrend, it warns of a potential bearish reversal (bearish Harami Cross). After a downtrend, it suggests a bullish reversal (bullish Harami Cross).

How to Trade

Confirm trend: Only trade when the pattern appears at the end of a clear trend.

Wait for confirmation: Enter after the third candle closes beyond the Doji in the reversal direction.

Set stop loss: Place stop loss above (for bearish) or below (for bullish) the first candle's high/low.

Take profit: Use support/resistance levels or Fibonacci retracements.

Real Example

Suppose EUR/USD is in a strong uptrend. Day 1: large bullish candle. Day 2: Doji inside the previous body. This is a warning. If day 3 closes bearish below the Doji's low, a sell entry is triggered expecting a reversal.

Common Mistakes

Trading when the pattern appears in a sideways market (no clear trend).

Not waiting for confirmation from the third candle, leading to false signals.

Setting stop loss too tight, getting stopped out before the move.

Content is for reference only, not investment advice. Forex trading carries high risk.

Harami Cross Pattern: A Strong Reversal Signal