Definition
Bearish Harami Cross consists of two candles: a long white candle and a Doji. Bearish Harami Cross forecasts bearish trend reversals with moderate reliability.
- Trend: Reversal
- Expected trend: Bearish
- Previous trend: Bullish
- Reliability: Moderate
- Type: Bearish
- Number: 2
Recognition
- The market is in an upward trend.
- The first day is a long white candle.
- The second day is a Doji. Its body is covered by the previous candle’s body (the shadows are not important).
Interpretation
The long white candle still reflects the ascending trend on the market. On the next day, the share opens below the previous closing price and the trading range remains narrow. The trading volume on the second day is low, the buyers and sellers become uncertain about the continuation of the trend. The Doji is a good signal, but a trading decision should be made only after a confirmation on the following day. If the share opens lower, short positions are recommended to open.
Important factors
Bearish Harami Cross has a higher reliability than the Bearish Harami formation. To make sure the trend is continued, a confirmation on the third day is needed. The confirmation could come from a black candle with a downward gap or a lower closing price.
