Candlestick Harami – Bearish

The bearish candlestick harami is one of the many Japanese candlesticks that is found at the top of an uptrend, and is the exact opposite of the bullish harami candle. The Japanese define this pattern to mean pregnant or body within and it is composed as a two candle formation. In order for the bearish candlestick harami to be valid when identified, it must contain the following criteria. First, the body of the first candle is green (or white) and the body of the second candle is red (or black). Second, the stock must have been in a definite uptrend in order for this signal to occur. This can be visually depicted on a chart when the long green candle occurs at the end of the trend. In other words, when identifying this pattern, the body of the first candle must be the same color as the current trend. Third, the second day of the signal should be a red candle opening below or lower than the close of the previous day, and it should be closing above or higher than the open of the previous day’s green candle. This also means that the first body of the pattern is a long body and the second body is smaller. Lastly, confirmation is needed and the next day should show weakness in order to confirm this pattern.

What does the bearish candlestick harami pattern indicate is happening in the markets?
This is an exciting candlestick pattern because is occurs at the top of a trend! The bears step in and open the price lower than the previous day’s close. Most investors must now own this stock and cannot afford not to own it! The bulls then begin to take their profits and get out before the price closes lower for the day. In other words, more experienced investors know when they see this signal that they must take their profit and move on before the trend reverses and the ability to make money slowly diminishes. Confirmation occurs when the following day is weakened and the trend begins to reverse.

Additional pieces of information to note when identifying this bearish candlestick include two things. First, the longer the green candle and the red candle the more forceful the reversal. Second, the lower the red candle closes down on the green candle, the more convinced investors are that a reversal has occurred, regardless of the size of the red candle.

Japanese candlesticks have been in use for over 400 years and they are reliable, and provide investors with valuable insight into the market and into potential price movements. Read about the additional candlestick patterns including the candlestick hammer signal, the inverted hammer candlestick, the hanging man candle, the candlestick piercing pattern, and many others. Most investors new to candlestick trading learn about the doji candlestick chart first, and then they move on to more advanced signals. Learn how to increase your profits through candlestick trading online and join me in my 2-Day Trading for Profits Online Training Clinic.

Continue your Japanese Candlestick education and read about the morning star signal.