Definition
The Bearish Harami formation consists of two candles: The long white candle is followed by a small, black candle. In Japanese, Harami means pregnant. The long candle is the mother, the short candle represents the child.
- Trend: Reversal
- Expected trend: Bearish
- Previous trend: Bullish
- Reliability: Low
- 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 black candle. The white candle’s body fully covers its body. The shadows are not necessarily covered, but the more is covered, the more reliable the formation.
Interpretation
The first candle is still white in the ascending trend, but the second day reflects uncertainty on the market. The opening price is lower than the previous day’s closing price and the trading range is much narrower. Additional black days verify the trend reversal.
Important factors
The most important condition of the formation is that the first day’s trading range must cover the second candle’s body. The Bearish Harami formation is not immediately a trend reversal. It rather signals a break in the ascending trend. However, when formed at the top of the channel, it can be interpreted as a trend reversal. The formation must be confirmed. It can come from a black candle with a downward gap or a lower closing price.
