A harami cross is a candlestick pattern that signals a potential reversal in the market. It is composed of a large candlestick followed by a small candlestick that is completely contained within the body of the first candlestick. The small candlestick can be either bullish or bearish, but the direction of the reversal is typically determined by the direction of the preceding trend.
The term "harami" means "pregnant" in Japanese, and this pattern is so named because the small candlestick is said to be "nesting" inside the body of the larger candlestick.
The harami cross pattern can be a powerful signal of a potential reversal, but it is important to confirm the signal with other technical indicators before taking any action.
What does harami pattern indicate? The Harami pattern is a two-candlestick reversal pattern that can be found at the bottom of downtrends. The pattern is composed of a long black candlestick followed by a shorter candlestick that is white and opens within the black candlestick's real body. The pattern is considered to be a bullish reversal pattern, with the long black candlestick representing the bearish trend and the shorter white candlestick representing the potential reversal to the upside.
What is difference between engulfing and harami?
Engulfing and harami are two candlestick patterns that are used by technical analysts to predict future price movements. Both patterns consist of two candlesticks, with the second candlestick engulfing or "hanging" inside the body of the first candlestick.
The difference between the two patterns is that, with an engulfing pattern, the second candlestick must close higher than the first candlestick (for a bullish engulfing pattern), or lower than the first candlestick (for a bearish engulfing pattern). With a harami pattern, the second candlestick can close at any level, as long as it is inside the body of the first candlestick.
Engulfing patterns are generally seen as more reliable predictors of future price movements than harami patterns, as they suggest a stronger change in momentum.
How do you trade harami patterns?
The Harami pattern is a two-candlestick pattern that can occur in either an uptrend or a downtrend. The first candlestick in the pattern is a long candlestick with a small body. The second candlestick is a short candlestick that is completely contained within the first candlestick's body.
The Harami pattern is considered a bullish reversal pattern when it occurs in a downtrend, and a bearish reversal pattern when it occurs in an uptrend.
To trade the Harami pattern, you would look for a long candlestick followed by a short candlestick that is contained within the first candlestick's body. You would then enter a trade in the direction of the reversal.