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Harami is a two-candle formation.
In other words, the body of the current bullish session is within the body of the previous bearish session. This formation is known as a Bullish Harami. It indicates that the bears are exhausted and bulls are trying to gain the control.
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.
Bullish Harami is a trend reversal pattern that needs more confirmation. It is a warning sign. This formation is weaker than the Engulfing pattern if we look at its internal price action. The confirmation from subsequent candles should be in the form of technical evidence – for example, other chart patterns, more lower shadows in that area, sustenance and close above the body of the Bullish Harami pattern, indicators, appearing at important support levels etc. are the possibilities.
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This pattern can be plotted on the chart by adding it from the study menu in TradePoint & 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.