The harami candlestick pattern is a two-candle pattern where a small body sits inside the body of a larger candle before it. It shows a strong move suddenly losing momentum, which can be the first hint of a turn. Like any candle pattern, it only deserves attention at a level where a turn makes sense.
Quick answer: what is a harami candlestick pattern?
A harami is a large candle followed by a smaller one whose body sits entirely within the first candle’s body. After a decline it is a bullish harami; after a rally, a bearish harami. It shows momentum stalling rather than reversing, so traders wait for a break of the pattern before acting on it.
What a harami looks like
Harami is Japanese for pregnant: the first candle is the mother and the small second candle sits inside it like a child. If candle bodies and wicks are new to you, start with how to read candlestick charts for beginners. We look for four things:
- A large first candle moving in the direction of the existing trend.
- A small second body that sits completely inside the first candle’s body.
- Wicks that may poke out: the rule is about bodies, not the full range.
- A move before it: without a prior trend there is nothing to stall.
The second candle is often the opposite colour to the first, which reads a little stronger, but the size contrast matters more than the colour. When the second candle instead closes deep into the first body, see the dark cloud cover pattern.
Bullish harami, bearish harami and the harami cross
The same shape gets a different name depending on the trend before it.
| Pattern | First candle | Second candle | Possible meaning |
|---|---|---|---|
| Bullish harami | Large bearish, after a fall | Small body inside it | Selling slowing |
| Bearish harami | Large bullish, after a rally | Small body inside it | Buying slowing |
| Bullish harami cross | Large bearish, after a fall | Doji inside it | Strong indecision at lows |
| Bearish harami cross | Large bullish, after a rally | Doji inside it | Strong indecision at highs |
In a harami cross, the second candle opens and closes at almost the same price. Many traders give it more weight than an ordinary harami because the stall is more complete. Our guide to the doji candlestick pattern and what it means covers that candle on its own.
Harami vs inside bar vs engulfing
A harami and an inside bar are often confused, but the rule is different. A harami only needs the second body inside the first body; its wicks can stick out. An inside bar needs the second candle’s whole range, high to low, inside the previous candle’s range.
So many inside bars are also haramis, but plenty of haramis are not inside bars. Price action traders also tend to trade the inside bar as a breakout in either direction, while the harami is read as a reversal clue. Our inside bar breakout strategy guide covers the mother bar method in full.
The engulfing pattern is the harami reversed: a small candle followed by a large one whose body swallows it. Engulfing shows a decisive shift, while a harami only shows a pause, which is why we treat the engulfing candle at support and resistance as the stronger of the two.
Where a harami candlestick pattern matters
A harami in the middle of a range is just two candles. We only pay attention when it forms where buyers or sellers had a reason to show up:
- At a zone drawn with our method for how to draw and trade supply and demand zones.
- At a support or resistance level ranked with our guide to which key levels count.
- On a pullback in the direction of the higher-timeframe trend.
- On 4-hour or daily charts, where each candle carries enough trading to mean something.
Be wary of anyone quoting a precise success rate. The best-known academic test of chart patterns, an NBER working paper by Lo, Mamaysky and Wang, found that some classical formations such as head-and-shoulders carried useful information in US stocks from 1962 to 1996. It did not test candlesticks like the harami, so we treat the pattern as a clue, not an edge.
How to trade a harami: entry, stop and target
- Location: the harami forms at a level marked before it appeared.
- Trigger: wait for a candle to break the harami’s high (bullish) or low (bearish). The pattern only shows a stall; the break shows follow-through.
- Stop: beyond the far end of the whole two-candle pattern, with a small buffer. Our guide on where to place a stop loss with price action explains buffers.
- Target: the next opposing zone. If it is closer than twice the stop distance, skip the trade.
- Size: set the stake from the stop distance using how to calculate position size.
Worked example: a bullish harami at a daily demand zone
All figures are hypothetical. On a £10,000 account we risk 1% per trade, which is £100. A currency pair has fallen for a week into a daily demand zone near 1.2500.
- Mother candle: a large bearish candle opens at 1.2620 and closes at 1.2520, with a low of 1.2490.
- Harami: the next candle opens at 1.2530 and closes at 1.2565, inside the first body. Its wick dips to 1.2480, below the mother’s low, so it is a harami but not an inside bar.
- Trigger: the following day breaks above the harami’s high of 1.2580. We buy at 1.2585.
- Stop: 1.2470, below the pattern low, which is 115 pips away. £100 divided by 115 pips is about £0.87 per pip on a spread bet.
- Target: a supply zone at 1.2815, 230 pips away, so the potential gain is about £200, twice the risk.
If price falls back through 1.2470, we lose about £100 plus spread. Spread bets are leveraged, so a gap through the stop could make the loss larger than planned.
Common mistakes with the harami
- Treating it as a reversal on its own. A harami shows a pause; many pauses become continuation.
- Confusing it with an inside bar. Check bodies for a harami and the full range for an inside bar.
- Trading it anywhere. Away from a level, the pattern carries little meaning.
- Stops inside the pattern. A stop above the low invites being taken out by normal noise.
- Ignoring the room to the target. A neat harami with an opposing zone just ahead is still a poor trade.
Frequently asked questions
Is a harami bullish or bearish?
It depends on the trend before it. After a decline it is a bullish harami, and after a rally it is a bearish harami.
What is the difference between a harami and an inside bar?
A harami needs the second candle’s body inside the first candle’s body, and its wicks may stick out. An inside bar needs the whole high-to-low range inside the previous candle.
Is a harami cross stronger than a normal harami?
Many traders think so, because a doji as the second candle shows a more complete stall. It still needs a level and a break of the pattern before we act on it.
Do you need confirmation after a harami?
We prefer it. Waiting for a break of the harami’s high or low costs some price but filters out many patterns that turn into continuation.
Next steps
Candle patterns work best inside a wider reading of the chart, which our complete beginner’s guide to price action trading builds step by step. A harami often forms the middle of a three-candle turn, covered in our guide to the morning star candlestick pattern.
Supply and demand, and a filters and trigger process for entries, are both part of our price action trading course, and the basics section is free to start.
This article is for education only and is not financial advice. Trading leveraged products such as CFDs and spread bets carries a high risk of losing money.
