Harami And The Harami Cross Candlestick Patterns Can Be Highly Profitable!
There are simple as well as complex candlestick patterns. There are single stick, two stick as well as three stick candlestick patterns. Harami is a two stick candlestick pattern. Two stick patterns take two days to form on daily charts. A Harami is formed whent the first day candle is longer than the second day candle. Harami can be bullish as well as bearish!
A bullish Harami candlestick pattern is formed when the first day candle is bearish. Rather the first day is very bearish and occurs on a downtrend. But on the second day, the bulls come into action and try to move the prices higher. But bulls are not very successful. The second day close is still lower than the first day open and the first day's high is never surpassed. However, the second day is a signal that the bulls have started to take the stand and stop the current downtrend.
On the second day when the Harami is formed, the bears are still slightly ahead of the bulls at the start of trading. The open is higher than the close of the last day. However, the bulls close the day higher than the open.
The bulls are still cautious after the downtrend thinking that the bears are going to come back again and push the prices still lower. The confidence the bulls gain when this does not happens encourages more buying and the culmination of the downtrend and the start of an uptrend.
Just like with other candlestick patterns, a Harami pattern can fail. So to be on the safe side when trading on the Harami, place the stop loss close to the open of the second day or what you call the signal day.
Harami has a few variations. In the Bullish Harami Cross Pattern, the first day is bearish. On the second day or what you call the signal day, you will find a bullish Doji formed with an open higher than the close of the first day and a close lower than the open of the first day. Bullish Harami Cross is not a frequent pattern but when it does appear, it means an abrupt trend reversal.
The bearish Harami Pattern is the other way around. The first day candle is bullish but the second day candle is bearish with the open lower than the close of the first day and the close higher than the open of the first day. But this means is that bears have taken over the market and soon a new downtrend is going to develop.
A bullish Harami candlestick pattern is formed when the first day candle is bearish. Rather the first day is very bearish and occurs on a downtrend. But on the second day, the bulls come into action and try to move the prices higher. But bulls are not very successful. The second day close is still lower than the first day open and the first day's high is never surpassed. However, the second day is a signal that the bulls have started to take the stand and stop the current downtrend.
On the second day when the Harami is formed, the bears are still slightly ahead of the bulls at the start of trading. The open is higher than the close of the last day. However, the bulls close the day higher than the open.
The bulls are still cautious after the downtrend thinking that the bears are going to come back again and push the prices still lower. The confidence the bulls gain when this does not happens encourages more buying and the culmination of the downtrend and the start of an uptrend.
Just like with other candlestick patterns, a Harami pattern can fail. So to be on the safe side when trading on the Harami, place the stop loss close to the open of the second day or what you call the signal day.
Harami has a few variations. In the Bullish Harami Cross Pattern, the first day is bearish. On the second day or what you call the signal day, you will find a bullish Doji formed with an open higher than the close of the first day and a close lower than the open of the first day. Bullish Harami Cross is not a frequent pattern but when it does appear, it means an abrupt trend reversal.
The bearish Harami Pattern is the other way around. The first day candle is bullish but the second day candle is bearish with the open lower than the close of the first day and the close higher than the open of the first day. But this means is that bears have taken over the market and soon a new downtrend is going to develop.
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