BEARISH HARAMI CANDLESTICK PATTERN

A bearish harami is a two-candle Japanese candlestick pattern that indicates a price reversal is imminent. A tall green candle is followed by a little red candle in this pattern. The second candle's opening and closing prices must be contained inside the first candle's body. The creation of a bearish harami is preceded by an upswing.

The bulls drive price upward, finally making a towering green candle. The next day's tiny body falls inside the preceding body's range, with the bears driving price down at the start and lower yet at the close—a red candle. The expectation is for price to fall, but as previously said, this happens practically randomly or with a tiny inclination to continue the rise.

• A bearish harami is a candlestick chart signal that indicates a price reversal in a bullish trend.
• Harami gets its name from the fact that it looks like a pregnant belly, and "Harami" means "pregnant" in Japanese.
• A slight decline in price (shown by a red candle) that may be contained within the given equity's upward price trend (represented by green candles) from the previous day or two is usually indicative.

On the second day, look for a little red candle with a body that fits inside the body of the green candle. The tops or bottom of the bodies can have the same price, but not both. In this pattern, disregard the shadows.

Consider the following factors to determine whether the candlestick pattern is 'bearish harami.'

• The market is on the rise.
• The first candle is tall green (bullish) candle.
• The second candle is a red candle with a little body. The body of the preceding candle must be enclosed within the body of the previous candle.
• The tops or bottoms of the two bodies can have the same price, but not both.

The bearish Harami marks the start of a new downward trend. As a result, it can only be observed near the end of an upward trend. The Harami begins with a giant green candle as the trend rises, indicating a mature trend blow-off. As the second candle's high falls below the previous candle's closure, the price begins to collapse, unable to extend any farther.

The second candle's body is enveloped by that of the first candle, and no meaningful progress is made to the bottom. This price action indicates that the market is so weak that it will be unable to rally to new highs. The price continues to decrease in the absence of new purchasers, signaling the start of a new downward trend.

The second candle, often known as the confirming candle, is an important trading tool. Traders might utilize the smaller candle to assess if a reversal or continuation is expected. The Harami pattern is a prominent technical analysis pattern. The main reason for this is its ability to detect a reversal quickly. This frequently occurs at the most inconvenient time and in the midst of a dangerous situation. As a result of this early tip, traders will have access to extremely high risk reward ratios. It's a significant edge from which they may benefit significantly.

Traders can boost their chances of a successful transaction by using technical indicators like the relative strength index (RSI) and the stochastic oscillator with a bearish harami.

• Wait for the next day's price to close lower to see if the uptrend is reversing. That approach is accurate 72% of the time, but it does not predict how far the price will go.
• In a bull market, the pattern is more likely to behave as a continuation than a reversal. Expect a breakthrough to the upside. The behavior of a bear market is unpredictable.