Bullish Harami

Name Type Prerequisite Use Cases
Bullish Harami Bullish Reversal OHLC Data Indicating a potential reversal or pause in a downtrend.

Definition

The Bullish Harami consists of a large red candle followed by a smaller green candle whose body is completely contained within the vertical range of the previous red candle's body. "Harami" implies "pregnant" in Japanese.

Pattern Structure

  1. Candle 1: Long red candle.
  2. Candle 2: Small green candle contained entirely within the body of Candle 1.

Mathematical Representation

\[ Open_1 > Close_2 \text{ and } Close_1 < Open_2 \]

Visualization

Bullish Harami

Story

A vicious downtrend seems fully entrenched after strings of aggressive selling. But unexpectedly, the following session opens higher than the previous close and trades in a tight, subdued range, completely contained within the prior massive red body. This sudden cessation of downward momentum is like a car slamming on its brakes. The bears have suddenly run out of ammunition, giving the battered bulls a glimmer of hope that the tide is turning.

Trading Significance

  1. Momentum Pause: Indicates that the intense selling pressure of the first candle has subsided.
  2. Reversal Potential: While not as strong as an engulfing pattern, it signals that the downtrend may be ending.