What it looks like
Two candles. First, a long candle in the direction of the move. Second, a small candle whose body sits entirely inside the first body. Bullish: long down, then small inside. Bearish: long up, then small inside. The small candle's colour can be either.
What it means
A strong candle was followed by one that went nowhere. The pressure has stalled. It is one of the gentler signals: a hint the move is tiring and no more than that.
Bullish and bearish versions
How to trade it
- 1
Do not trade the harami on its own.
- 2
Confirm: wait for a candle to close above the pattern's high (bullish) or below its low (bearish).
- 3
Enter on that close, with a stop just beyond the other end of the pattern.
- 4
Target: 2 times the stop, or the nearest swing level.
- 5
Example: on gold 1 hour a 15 point down candle is followed by a 4 point inside candle. A later candle closes above the pattern's high; you buy with the stop below the low and aim for twice that risk.
A close below the pattern's low (bullish) or above its high (bearish).
Where it works best
After a stretched move into a floor or ceiling. When confirmed it becomes three inside up or three inside down.
WickSpeak finds the harami automatically on any chart and names it on the candles that made it. Next to the name it writes what the pattern is, how to trade it and what proves it wrong, so you never have to guess the rule. In Playbook you can use the harami, or any of the 146 patterns, as a condition alongside up to 12 conditions on any of 12 timeframes, then backtest it on past candles with your costs.
Common mistakes
- Trading it as soon as the small candle closes.
- Calling it a harami when the second body pokes outside the first.
- Forgetting the stop sits beyond the long candle, so risk can be wide.
Related patterns
Questions traders ask
What does harami mean?
It is Japanese for pregnant, because the small candle sits inside the large one.
Is a harami a strong signal?
No. It is one of the gentler signals and needs a close beyond the pattern before trading.
What is the difference between a harami and an inside bar?
A harami compares bodies only. An inside bar has the whole candle, wicks included, inside the previous candle's range.
What cancels a harami?
A close beyond the far end of the pattern: below the low for bullish, above the high for bearish.