What Is a Harami Pattern?
The first candle is large—direction of the prior trend. The second is smaller, opening and closing inside the first body, like a child within the mother bar—harami means pregnant in Japanese. The pattern signals deceleration: the market digests the prior move without yet reversing. Bullish harami appears when the first bar is bearish and the second small bar is bullish inside it at support. Bearish harami flips roles at resistance after a rally. Harami are weaker than engulfing reversals until follow-through confirms.
Shadows of the second bar may extend outside the first body—purists focus on body containment for classification.
How Do You Identify Valid Harami Setups?
Second body must fit entirely within first body open-close range, not merely within high-low wicks. First bar should be meaningfully large versus recent ATR. Location at support for bullish, resistance for bearish, after extended legs. Volume on second bar often drops—absorption pause. Third-bar confirmation is standard practice. Compare to inside bar: harami requires body-inside-body; inside bar uses full range containment. Multiple harami in chop are common and low quality.
Bullish harami after single red day in uptrend is pause, not reversal—trend context filters noise.
What Confirmation Should Traders Require?
Long after bullish harami when third candle closes above the mother bar high with volume. Short after bearish harami when third closes below mother low. Without third bar, harami is watchlist only. RSI divergence at level adds confluence. Break of mother bar range without third close is aggressive. In strong trends, harami often resolve as continuation—trade with trend breaks of the small bar range when counter-trend harami fails.
Harami cross variant uses doji as second bar—indecision stronger but still needs directional break.
Where Do Stops and Targets Go?
Bullish harami long: stop below mother bar low or harami low, whichever is tighter for your plan. Bearish short: stop above mother high. Targets at prior swing, mother bar height projected from break, or fixed reward multiple. Mother bar defines natural risk width—skip if too wide for account rules. Partial at first resistance after bullish harami reduces gap risk.
Place stops beyond mother extremes—inside stops get tagged on wicks that still respect the pattern.
When Do Harami Patterns Fail?
Mother bar small in range-bound markets—pattern lacks significance. Second bar barely inside body—marginal geometry. Strong trend continues through harami without pause. False breaks of mother range whipsaw. Confusing harami with engulfing reverses bias. Low volume break fails to attract follow-through. Harami are pause hints—high failure rate without third-bar confirmation and level context.
Track failure when third bar closes back inside mother range—pattern unresolved, exit or stand down.