Definition
Harami (Japanese for 'pregnant') forms when a small candle's body is completely contained within the previous larger candle's body. It signals potential reversal as momentum slows. Bullish harami appears in downtrends; bearish harami in uptrends.
Formula
Small candle body completely within previous large candle body
Example
After a strong down day ($52→$48), the next day shows a small range ($49→$50) entirely within the prior body. This bullish harami suggests selling exhaustion.
FAQ
What is Harami Pattern?
A two-candle pattern where the second candle is contained within the first.
How do you calculate Harami Pattern?
A common formula for Harami Pattern is: Small candle body completely within previous large candle body
Why is Harami Pattern important?
Harami Pattern helps investors evaluate candlestick patterns and make more informed decisions.