Bullish Harami
Candlefocus EditorDeveloped by Japanese rice traders centuries ago, the bullish harami consists of two consecutive candlesticks of opposite colour. The first candlestick is a bearish candlestick and the second candlestick is a bullish candlestick that has its open and close within the range of the bearish candlestick before it. The second candlestick will be either a Doji or another short candlestick if the pattern is real. This indicates a potential trend reversal and the trader should prepare to buy the equity when the pattern is confirmed.
By looking at the pattern, traders can interpret that the sellers are losing their enthusiasm, which is subsequently paving the way for buyers to enter the market. This interpretation can then be used to guide investors and to decide whether or not they should invest in the security that is exhibiting the bullish harami pattern.
The bullish harami is a reliable reversal indicator because it confirms the underlying trend. After the second candlestick has closed, traders often observe a reversal in the market. This pattern helps traders identify a bearish trend that can be bought for a potential trend reversal.
In summary, the bullish harami is an effective technical indicator used to spot reversals in a bear market. It consists of two opposing candlesticks with the second candlestick’s open and close being within the range of the first. This indicates a possible trend reversal and should be used as a valid indicator to determine when to enter or exit a position in the market.