Harami
A harami is a two-candle pattern where a small candle's body is completely contained within the previous larger candle's body. Bullish harami: large red candle followed by small green. Bearish harami: large green candle followed by small red.
Understanding the Concept
"Harami" means pregnant in Japanese—the small candle is like a baby inside the mother. It signals potential reversal because the small candle shows momentum has stalled. After a big move, the market pauses. That pause often precedes a direction change. Harami patterns are less reliable than engulfing patterns because the second candle shows indecision rather than conviction. Always wait for confirmation. A harami at a key level (support/resistance) is more meaningful than one in the middle of nowhere.
Real-World Example
Ethereum drops hard with a large red candle from $3,000 to $2,800. Next day, a small green candle opens at $2,850 and closes at $2,870—entirely inside the previous body. Bullish harami: watch for continuation higher.
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