Harami
A small candle inside the previous large one. The move has run out of breath, but the reversal isn't confirmed yet.
Harami — what it is?
A harami is a candle that fits entirely inside the body of the previous one. The name is Japanese and means "pregnant": a small body inside a large one.
It reads as a sharp drop in activity. After a wide candle the market contracted and couldn't continue the move.
It's not a reversal, it's a signal that things have stalled. Either continuation or a change of direction can follow — structure decides that, not the pattern.
Harami — how it is built?
The bodies are compared: the second candle inside the body of the first. If the whole range fits inside, wicks included, that's already an inside bar, and it's read more broadly.
Harami — common mistakes
Treating a harami as a reversal pattern without confirmation.
Confusing it with an inside bar: there the full range is compared, not the bodies.
Trading it in isolation from a zone of interest.
Hunting for it on lower timeframes, where contractions like this happen constantly.
Related to
Glossary
- candle
- the element of the chart that shows four prices for a period: open, high, low, close.
- candle body
- the rectangle between the open and the close.
- range
- movement inside a horizontal corridor with no clear direction.
- Inside bar
- a candle whose high is below the previous high and whose low is above the previous low. The range compressing.
- zone of interest
- an area marked up to look for an entry point.
- timeframe
- the period one candle holds: M5 is five minutes, H1 an hour, D1 a day.