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Tutorial on Bearish Harami Candlestick Pattern

What is Bearish Harami Candlestick Pattern?

Bearish Harami Pattern is formed near a resistance or at the end of an uptrend. This pattern is a trend reversal type and its reliability is low if watched alone. However if considered with other technical indicator may a strong signal for the investors. This pattern is composed of two candlestick, formed on two consecutive days.
First Day: A Long bullish candle is formed, shown in green in the fig below.
Second Day: A small bearish candle is formed shown in green in the fig below.

The pattern got its name because in Japanese: Harami means pregnant or body within. In this pattern a small bearish(red) candlestick is formed on day 2 which lies within the body of the bullish (green)candle formed on day 1.

For Bearish Harami pattern to be formed it is very important that:
a. The open price of the Day 2 candlestick is lower than the close price of Day1 candlestick.
b. The close price of the Day 2 candlestick is Higher than the open price of Day 1 candlestick.

Bearish Harami pattern is considered to be a signal of trend reversal, giving investors indication that the bull is weakening and there is a possibility of bear to take over the market.
The size and location of the bearish candlestick formed on Day 2 will tell more about the magnitude of this pattern. The bigger bullish candle of Day1 and a comparably small bearish candle of Day 2 represents strong trend reversal. Similarly if the Bearish candle formed on Day 2 is located near the bottom of the Bullish candlestick formed on Day 1 then one can say the downtrend may be slow, but if it lies near the top side of the bullish candle one can say the reversal is stronger or more convincing.

Precautions Taken while using this pattern?
1. Further confirmation of this pattern is required which can be done by integrating this pattern with the study of other technical indicators.
2. Like if this pattern is formed at the top of an uptrend together with oversold condition then it further strengthen strong a sell signal. This pattern has no validity if formed at downtrend.

Volume: Volume plays important role in validating this pattern. A high volume or a gap down next day(Day3) reconfirms further trend reversal.
The bearish Harami could be the first two days of bearish Three Inside Down.

Now we have learnt what Bearish Harami candle stick is, its time to see them in real life. Our website provides free stock screening based on Bearish Harami . It can be found at this link

Example of Bearish Harami Candlestick Pattern

Harami Candlestick Patterns Screener

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