What is a harami candlestick pattern?
Four conditions, shown in the drawing at the top of this page. If bodies and wicks are new to you, start with how to read candlesticks.
Hypothetical daily chart: after a decline, the mother candle opens at $44.20 and closes at $41.00, a red body of $3.20, with a high of $44.50 and a low of $40.60. The next candle opens at $41.40 and closes at $42.30. Its $0.90 body sits between $41.00 and $44.20, inside the mother’s body, so the two candles form a bullish harami. Had the baby opened at $40.90, below the mother’s close, it would not count.
- Prior move: a decline before a bullish harami, a rise before a bearish one.
- Mother: a long body that goes with the move, a clear push by one side.
- Baby: a small body that sits completely inside the mother’s body. Only the bodies count; the baby’s wicks may poke out.
- Colors: usually opposite, which is the classic form. A baby of the same color still shows a stall, but a weaker one.
Bullish harami, bearish harami and harami cross
The three panels below show the versions. A bullish harami follows a decline: a long red mother, then a small green baby inside it. A bearish harami follows a rise: a long green mother, then a small red baby inside it. The meaning is the same in both: the side that pushed hard in the mother candle could not do it again in the next period.
When the baby is a doji, with an open and close almost equal, the pattern is called a harami cross. The stall is sharper, because neither side won the second period at all, but it still needs the same confirmation as any other harami.
Harami vs engulfing and inside bar: what is the difference?
The harami is the engulfing pattern reversed. In an engulfing, a small body is followed by a big one that covers it, which shows the other side taking over. In a harami, a big body is followed by a small one inside it, which only shows the move pausing. That is why an engulfing can be traded on its own close at a level, while a harami needs a further close to say which way the pause ends.
Price action traders use a looser cousin, the inside bar: a candle whose whole range, wicks included, sits inside the previous candle’s range. The two overlap but are not the same: a harami lets the baby’s wicks poke out of the mother’s range, while an inside bar may have its body outside the mother’s body as long as the whole candle stays inside the range. Both describe the same idea, a contraction after a big candle, covered in price action trading.
How do you confirm a harami?
A harami says “pause”; the next closes say which way the pause breaks. For a bullish harami, the usual confirmation is a close above the mother’s high, the point where the whole selling candle has been taken back. Some traders accept a close above the mother’s open, the top of its body, which comes sooner but filters less.
A bearish harami is the mirror: a close below the mother’s low confirms it, and a close above the mother’s high cancels it. Until one of those closes happens, the two candles are a range, not a signal.
- Location: the mother ends a move at a level other traders watch, such as support or resistance, a prior swing or a long-term moving average.
- A closed baby: wait for the second candle to close. Halfway through the period it may still break out of the mother’s body.
- A close beyond the mother: above its high for a bullish harami, below its low for a bearish one.
How to trade a bullish harami: entry, stop and target
Continuing the hypothetical from above, as in the drawing at the top of the page. The mother closed at $41.00 on a support zone, and the baby stayed inside its body. The plan for a bearish harami is the same, upside down.
- Confirmation: the next candle closes at $44.80, above the mother’s high of $44.50.
- Entry: buy near $44.80 at that close.
- Stop: just under the mother’s low of $40.60, at $40.40. That is $4.40 of risk per share; a long mother candle means a wide stop.
- Target: the next resistance, say $53.60, $8.80 away, a 2:1 risk-reward ratio. If the nearest resistance sat at $47.00, the trade would offer too little.
- Size: risking $220 on the trade, $220 ÷ $4.40 = 50 shares. The position size calculator does this for you.
When does a harami fail?
A bullish harami fails when price closes below the mother’s low: the pause ended the way the trend was already going. In the right panel below, the pattern forms with no support beneath it, the next candle closes lower instead of confirming, and the one after closes under the mother’s low and the stop. Whoever bought before confirmation takes the planned loss, or more on a gap; whoever waited never entered.
The three-candle cousin of the bullish harami is the morning star, and the bearish harami often appears inside an evening star, so the same warnings apply. The usual reasons a harami fails:
- No level: a harami in the middle of a decline is often only a pause before the next leg down.
- A tiny mother: a small first candle shows no real push, so a stall after it means little.
- A strong trend on the higher timeframe: pauses against it tend to resolve in its direction.
- Gaps: an overnight gap can open beyond the stop, so the loss can exceed the plan.
Harami terms in plain words
The words that come up when traders talk about this pattern, each in a sentence or two.
- Harami
- A two-candle pattern where a small body sits entirely inside the body of the large candle before it. It signals a stall in the prior move.
- Mother candle
- The first, large candle of a harami. Its high and low set the confirmation and failure levels.
- Baby candle
- The second, small candle of a harami, whose body must sit inside the mother’s body.
- Harami cross
- A harami whose baby is a doji, with an open and close almost equal.
- Inside bar
- A candle whose whole range, wicks included, sits inside the previous candle’s range. It is a cousin of the harami used in price action trading, judged by ranges instead of bodies.