Online Stock Trading - Stock Charts for Beginners - Harami Candlestick Pattern
The trend can be either bullish or bearish i.e. either an uptrend or a downtrend. In the case of an uptrend, the appearance of the Harami is a negative signal which may mean that the trend is over and will either become a sideways trend or a downward trend.
In the case of a downtrend the Harami may signal a move sideways or upwards.
The Harami requires two candles side by side - the first candle shows that the uptrend (or downtrend) is continuing but the second candle has a small body which is entirely overlapped by the first candle. There may or may not be shadows present and the body can be any color. Confirmation that a change in trend has taken place requires that trading continues below the low of the first candle in an uptrend (or above the high of the first candle in a downtrend). Conservative traders will prefer to wait to see if prices actually close below the low (or above the high)
The Harami shows that there is indecision in the market. The second candle is showing that the trend is running out of steam. It means that no trend is dominant and is not a strong signal which is why confirmation is needed.
A common variation of the Harami is the Harami cross, which is two candles in which the second candle is just a cross i.e. it has no body. The concept is the same, indecision and a possible reversal.
If you are a beginner to stock trading you need to learn at least the basics of stock charts for beginners as if you don't you will be at a disadvantage compared to those who do !
Other candlestick patterns - Doji Candlestick - Inverted Hammer Candlestick
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