The bullish harami and bearish harami are reversal patterns in technical analysis, made up of two Japanese candlesticks:
✓ the bullish harami suggests that the trend will shift to an upward movement;
✓ the bearish harami indicates that prices may move downward.
In this article, we will examine how effectively classic candlestick patterns can be used in modern trading.
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The pattern’s name comes from the Japanese word はらみ (harami), which literally means “pregnancy” or “a body in the womb.” This refers to the way the pattern visually resembles a pregnant woman, with the larger candle symbolizing the mother’s body and the smaller one inside representing the child.
A bullish harami is made up of two candles:
A bearish harami is the reverse:
Below are examples of bearish (1) and bullish (2) harami patterns that formed in the fall of 2023 on Amazon (AMZN) stock’s daily chart.
The chart provides sufficient confirmation of the pattern’s effectiveness:
Please note that applying standard rules for trading harami patterns can trigger stop-losses. But let us take things step by step.
The harami pattern suggests a potential trend reversal, where the smaller candle forms within the body of the previous larger candle.
The main risk is that the small candle may not signal a full reversal but rather a temporary pullback, with the trend possibly continuing afterward.
How can you tell which outcome is more likely? Analyzing volume data with professional footprint charts can provide valuable insight.
The harami cross consists of two candles:
An example of a harami cross. In September 2024, Tesla’s (TSLA) daily chart showed a harami cross pattern (1), where the first candle is a wide bearish one, and the second, located inside, closely resembles a doji.
Bears had made some progress, as indicated by the red downtrend line. However, the appearance of the harami cross — despite not forming at the end of the downtrend — hinted at a possible upward movement.
This time, the analysts’ expectations were correct: the price did not fall below the doji but instead began to rise, leading to a bullish breakout above the resistance level near $133.
☑ Classic rules for trading the bullish harami:
☑ Classic rules for trading the bearish harami:
Now you can see why following these classic trading rules for the bullish and bearish harami triggered stop-losses on the AMZN chart earlier (although it could have also led to a profitable trade).
But could harami setups prove to be more effective in the long run?
Research by renowned candlestick expert Thomas Bulkowski reveals a relatively low success rate for trading harami patterns on daily stock charts:
✓ Bullish harami pattern:
✓ Bearish harami pattern:
Studies conducted by CandleScanner on S&P500 daily stock charts from 1995 to 2015 provide more promising results.
✓ Bullish harami pattern:
✓ Bearish harami pattern:
According to Candle Scanner statistics, traders are more likely to see positive outcomes rather than losses when trading the harami pattern.
Bearish and bullish harami patterns involve trading against the trend, making it essential to arm yourself with additional tools. The best approach is to use cluster charts, which offer rich insights and allow you to decode the market signals hidden within the harami candles.
SPY is a popular instrument that tracks the fluctuations of the S&P 500 index. On September 6 and 9, two candles formed a bullish harami pattern on the chart.
The main volume of trades was recorded at the lower part of the September 6 candle. The start of trading at higher levels on September 9 indicated the formation of a bear trap — a signal that increases the chances of a reversal from the bottom.
In this case, trading the bullish harami using classic rules proved to be profitable:
The red arrow points to the testing of a cluster of large volumes on September 11, formed around the low of the September 6 candle. For a cluster chart analyst, this test could have provided a long entry setup with the same profit target but significantly lower risk.
To gain more reliable confirmations, you should:
On May 21 and May 22, 2024, two candles formed a bearish harami candlestick pattern on the daily chart for Netflix (NFLX).
When trading this pattern according to classical rules, a logical approach would be to:
The stop-loss was triggered the next day, but the profit target was not reached for several days. In this case, the bearish harami indicated only a short-term pullback within a developing uptrend.
Volume analysis could have helped reduce the risks associated with opening a short position. On May 23, the decline occurred on low volumes (3), signaling a lack of sellers (No Supply, VSA). They were also clearly in the minority during the breakout on May 20, as indicated by the lighter clusters within the candle (4). This zone remained intact from May 31 to June 4.
The red arrow marks a pattern that could have become a bearish harami if the lower shadow had been shorter.
The harami is a reversal pattern that signals a possible change in the trend’s direction. It can be either bullish or bearish.
A bearish harami is a reversal pattern on a candlestick chart. It consists of a large bullish candle followed by a smaller bearish candle contained within the first one.
A bearish harami cross is a variation of the bearish harami pattern where the second candle is a doji, meaning its opening and closing prices are almost at the same level.
The harami pattern suggests a potential reversal of the current trend, signaling a shift in market sentiment. A bearish harami points to a possible transition from a bullish to a bearish trend, while a bullish harami indicates the opposite.
The classic harami pattern is most effective on daily candlestick charts where gaps can occur. However, it is less applicable to the cryptocurrency market since coins trade 24/7.
The reliability of the bullish harami pattern is questionable. While CandleScanner data shows a false signal in 19% of cases, research by Thomas Bulkowski suggests it fails 47% of the time. To improve trading accuracy with harami patterns, it is recommended to use additional tools and approaches, such as footprint pattern analysis.
To trade harami patterns more effectively, use professional volume analysis tools such as:
You can test how successful your harami and cluster trading strategies could be by using the ATAS Market Replay simulator. This platform module uses historical data to recreate real-time trading conditions, enabling you to sharpen your trading skills without any financial risk.
To try the simulator, download the ATAS platform for free, install, and launch it, and then:
The chart shows a price reversal in Microsoft (MSFT) stock, with candles 6 and 7 marking a bullish harami pattern. Ideally, candle 6 should have formed at the bottom of the decline for a perfect setup.
This example highlights how developing skills in cluster chart analysis can elevate your candlestick pattern trading, even if you find these patterns outdated.
The harami pattern signals a potential trend reversal when a smaller second candle forms within the body of the first. While this can suggest a shift in market momentum, it is not always the case — research shows that 16% to 53% of harami trades can result in losses.
✔ Profit potential. Harami patterns can offer early entry points at the start of a new trend.
✔ Frequency: CandleScanner data shows that harami patterns appear on daily charts 4-5% of the time, making them fairly common in candlestick analysis.
✘ Ambiguity. When this pattern appears, it often signifies a temporary pause in the trend rather than a full reversal.
✘ Unclear profit targets. Traditional trading literature suggests identifying support and resistance levels or calculating profit targets based on stop-loss size. This can be particularly challenging for beginners.
✘ Large stop-loss levels. If the first candle in the harami pattern is too wide, it may lead to excessively large stop-loss placements.
Experience shows that modern methods like cluster analysis are far more effective than relying solely on harami and other Japanese candlestick patterns. This highlights the importance of using footprint charts and other volume analysis tools as the main resources for making well-informed trading decisions, rather than just supplementary tools.
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