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Harami is a two-candle formation.
The body of the current bearish session is within the body of the previous bullish session. This formation is known as a Bearish Harami. It indicates that the bulls are exhausted.
The meaning of Harami is a pregnant lady in Japanese language. The first candle is like a mother and the second is baby. This pattern is same as western Inside Bar pattern but in this case the body of the current session is within the body of the previous session, not the whole candle.
Bearish Harami is a trend reversal pattern that needs confirmation. It must typically be viewed as a warning sign.
Larger the body of the first candle and smaller the body of the second candle – the better it is. Therefore, an ideal Bearish Harami pattern would consist of a large bullish candle like a Belt Hold Line followed by a small bearish candle like a Shooting Star, Hanging Man, Doji etc.
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This pattern can be plotted on the chart by adding it from the Add study menu in TradePoint & Patterns in RZone. The pattern is also available in the System Builder section. By combining this pattern with other patterns and indicators, you can create your own trading strategies. For any group of stocks and market segments, you can scan and backtest stocks based on those strategies.