What is the harami pattern?
The harami pattern is a two-candle formation in which a large candle is followed by a small candle whose body sits entirely within the body of the first. It belongs to the family of reversal-oriented candlestick patterns and points to a possible pause or turn in the current trend rather than a confirmed change of direction. The name comes from an old Japanese word for pregnant, with the tall first candle acting as the mother and the small second candle as the baby tucked inside it.
What defines the pattern is the relationship between the two real bodies, not the wicks. The open and close of the second candle both fall inside the open-to-close range of the first, and the shadows are ignored. A harami marks a sudden contraction in range: a wide session followed by a quiet one, which traders read as momentum stalling.
How do day traders identify the harami on a chart?
Day traders identify the harami on a chart by finding a tall candle followed by a small candle contained within the prior body, then checking the trend that led into it. The first candle should run in the direction of the existing move, and the second should be small enough that its body fits inside the first. The tops or the bottoms of the two bodies can share the same price, but not both, or the containment is lost.
Trend context is the filter that separates a tradable harami from random noise. The same two-candle shape means little in the middle of a sideways range and a great deal at the end of an extended run. Pattern tools make it easy to spot a harami in your charting software without scanning bar by bar, which frees the trader to focus on location and confirmation instead of hunting for the shape.
One variant changes only the second candle. When that small second candle is a doji, with its open and close within pennies of each other, the formation is a harami cross. The doji shows sharper indecision than a small-bodied candle, and traders often treat the cross as a slightly firmer warning that the prior trend is running out of fuel.
Is the harami bullish or bearish?
The harami is read as bullish or bearish depending on the trend it interrupts and the color of its two candles, so the identical structure carries opposite meaning in different settings. The first candle always points with the prior trend, and the second one hints that the trend may be losing its grip.
Bullish harami
A bullish harami forms during a downtrend, when a tall bearish candle is followed by a small bullish candle nested inside the prior body. The big red candle reflects heavy selling, then the next session opens higher and closes in a tight range, failing to make a new low. Traders read that failure as sellers losing control and read a close above the top of the pattern as confirmation that buyers have stepped in.
Bearish harami
A bearish harami forms during an uptrend, when a tall bullish candle is followed by a small bearish candle held inside the prior body. The large green candle shows aggressive buying, and the next session stalls without extending the move higher. Traders interpret the small inside candle as buying pressure fading, with a close below the bottom of the pattern treated as the cue that supply is taking over. A harami without a confirming next candle is just a small candle inside a big one, and acting on it blind is closer to a guess than a read.
How do day traders trade the harami?
Day traders trade the harami by waiting for confirmation rather than entering the instant the small candle closes. A common approach is to enter only when the candle after the harami closes in the direction of the expected reversal, which screens out the many cases where price simply drifts back into the prior trend. Volume adds a second layer of confirmation, and a confirmation candle backed by rising relative volume carries more weight than one on thin trade.
Location is what turns a marginal harami into a setup worth taking. The pattern earns the most respect when it lands at a tested support or resistance level, at VWAP on an intraday chart, or near a prior swing high or low where price has reacted before. A bullish harami at fresh support, confirmed on the next bar, is a far better trade than the same shape printed in the middle of nowhere.
Where do day traders set a target and stop on the harami?
Day traders set the stop just beyond the far end of the large first candle and place the target at the nearest level of structure. For a bullish harami, the stop sits below the low of the tall bearish candle, since a move through that low voids the reversal read. For a bearish harami, the stop sits above the high of the tall bullish candle.
Targets work best when tied to the chart rather than a fixed point count. The first logical objective is the nearest prior support or resistance, a moving average such as the 20 EMA or VWAP, or a measured risk multiple like 2R against the distance to the stop. Because the harami often produces a short move, taking partial profit into the first level and trailing the rest keeps the trade aligned with how the pattern actually behaves.
How do day traders scan for the harami?
Day traders scan for the harami using pattern-recognition software that flags the two-candle structure automatically across hundreds of tickers at once. Most active charting platforms include built-in candlestick detection, and tools that support automated candlestick detection with TrendSpider can alert the moment a qualifying inside candle prints, which matters on fast intraday charts.
A raw harami scan returns far too many hits to be useful on its own. The fix is to layer filters that match how the pattern is actually traded: an established trend into the pattern, a tall first candle, elevated relative volume, and proximity to a known support or resistance level. Stacking those conditions turns a flood of random inside bars into a short, watchable list.
The harami vs the engulfing pattern: how do they differ?
The harami and the engulfing pattern differ in which candle is larger and what it does to the one before it. In a harami, the second candle is small and its body sits inside the first, a contraction in range. In the engulfing pattern, the order flips: the second candle is large and its body completely swallows the prior body, an expansion in range.
That difference changes how traders weigh each signal. An engulfing candle shows one side overpowering the other in a single session, which reads as a more forceful shift than the quiet hesitation of a harami. Both are two-candle reversals built on trend context, but the engulfing pattern tends to be treated as the stronger of the two because the reversal candle itself carries the momentum, rather than only implying that the old momentum has stalled.
How reliable is the harami, and when does it fail?
The harami is close to a coin flip on its own, which is the most important fact a trader can carry into any setup built around it. In Thomas Bulkowski’s tested data from the Encyclopedia of Candlestick Charts, the bullish harami acts as a bullish reversal only 53% of the time, ranking 38th of 103 candle patterns for overall performance. The bearish harami performs worse against its own theory: it is supposed to signal a downward reversal, yet testing shows it acts as a bullish continuation 53% of the time and ranks 72nd of 103. The harami cross is no better, with the bullish version continuing the prior downtrend 55% of the time and the bearish cross acting as a bullish continuation 57% of the time.
Those numbers explain when the pattern fails. The harami breaks down most often when it is traded as a standalone signal, when the first candle is small, when volume is thin, or when it appears inside a choppy range with no real trend to reverse. It holds up better when the first candle is tall, when the formation sits at a tested level or near a yearly extreme, and when a confirming candle follows in the expected direction. Marketed as a clean reversal trigger, the harami is in practice a context-dependent hint, useful as one input among several and unreliable as a reason to trade by itself.
Related patterns worth studying next include the doji, the engulfing pattern, and other two-candle reversals that only sharpen entries when they are read in the context of trend, level, and volume.