What Is the Bullish Harami Candlestick Pattern in Trading?

It looks like the big red candle is “pregnant” with the smaller green one, which is why it’s called Harami (“pregnant” in Japanese).

What it signals

The big red candle shows that the sellers were in control, but the next day (or period), the price opened higher and closed slightly up: the buyers stepped in, and the sellers couldn’t drive the price lower. So basically the idea behind the Bullish Harami is that sellers are losing momentum, and buyers may take action.

Important: don’t mistake the Bullish Harami for an Inside Bar. An Inside Bar is a smaller range within a larger candle, but it doesn’t necessarily indicate a shift in momentum. The Bullish Harami provides you with more insight in the context of a downtrend and also points at sentiment change.

How to identify the Bullish Harami pattern on a chart

Here are four steps to spot the Bullish Harami on a chart.

1. Look for it in a clear downtrend: after strong bearish moves, ideally in oversold conditions. A series of lower highs and lower lows is a sign.

2. Don’t ignore additional confirmation: check that the RSI < 30 (again points at oversold conditions) or MACD divergence (price and MACD are moving in opposite directions).

3. Remember that the Bullish Harami is stronger if the pattern forms near support or high-volume zones.

4. Avoid this common mistake: many traders look for Bullish Harami patterns everywhere, including in sideways markets. But this pattern only works well after a strong move down, and may produce false signals in choppy markets.

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The Bullish Harami vs similar patterns

The Bullish Harami may look similar to some other popular patterns. Let’s look at the main differences between them. It will help you distinguish a Harami from more aggressive patterns such as Engulfing, which tend to reverse more decisively. The Harami, in contrast, suggests pause, not a pivot. This makes it less aggressive, but more common, and still valuable if confirmed by other tools.

Trading strategies using the Bullish Harami

It’s easy to jump right into a trade, having made a decision based only on a pattern. But a solid trading strategy demands context, confirmation, and a plan: candlesticks alone can’t do the whole job. Here’s how to build a reliable strategy when dealing with the Bullish Harami.

Basic strategy: the most straightforward

• Entry: buy after the second (bullish) candle closes.

• Stop-loss: place it at the low of the two-candle pattern.

• Take-profit: set it near the first resistance or use Average True Range (ATR) to set a dynamic target based on volatility.

Trading with indicators: filtering out false signals

There is no such thing as too much confirmation. Combine the pattern with popular technical tools.

• RSI divergence: use it as a filter. Look for bullish divergence, where the price makes lower lows, but the RSI makes higher lows. This suggests momentum is weakening, and the Harami might be signaling a true reversal.

• MACD bullish crossover: if the MACD line crosses above the signal line after the Harami, that’s a powerful confirmation. Combine it with volume analysis or a break of structure for even more confidence.

• Multi-timeframe tip: if the Harami appears on H4, look for a structure break or momentum shift on M15.

• Risk management: sadly, Harami often gives false signals. Avoid entry without confirming volume or a structure break on a lower timeframe.

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Real Examples of Bullish Harami in Action

Take a look at a textbook example of a Bullish Harami Pattern.

Here we see a long bearish candle hugging a small bullish one. But is that enough to say that it’s a Bullish Harami? No. The RSI bullish divergence confirms weakening momentum, volume spikes slightly on the green candle and a strong downtrend is obvious. Now we can be sure this is the Bullish Harami. This setup shows how the pattern can serve as an early signal of reversal when supported by broader market context — only a signal, not a guarantee. Here, both price action and indicator confirmation align, leading to a sustained move higher.

Pros and cons of the Bullish Harami

No pattern is perfect, so be aware of these pros and cons of the Bullish Harami and use them to your advantage.

Pros:

• It’s an early signal of potential reversal, often even before indicators react.

• It’s easy to spot on the chart, no complex tools required.

• It works well with confluence setups (support zones, RSI divergence).

Cons:

• Alone it can fail. There’s a high rate of false signals without confirmation.

• It has weak momentum, because it usually signals a pause rather than a reversal.

• It needs volume, trend context, or secondary signal for actionability. Don’t hesitate to use additional evidence for confirmation.

The Bullish Harami is a useful tool, but only with the right filters.

FAQ

Is the Bullish Harami reliable?

Don’t rely on it alone. It needs context – ideally, a clear downtrend, volume shift, or indicator divergence. Without that, it can easily fail. Always combine it with confirmation.

Can it be used on intraday charts?

Yes, but be cautious. Lower timeframes like 5M or 15M typically produce more noise and false signals. Use smaller positions or wait for confirmation from higher timeframes.

What timeframe is best?

For crypto, H1 and higher offer better structure and fewer fakeouts, while for stocks and Forex, 4H to daily charts work well for swing trading.

Bullish harami vs engulfing: which is stronger?

Engulfing patterns often trigger sharp reversals because they show full rejection of prior momentum. Harami is a softer and more cautious signal. It typically requires additional confirmation such as RSI divergence, volume support, or a key level bounce.

Summary

The Bullish Harami isn’t a holy grail, it’s an early warning signal best viewed as an alert. Go beyond patterns and build a story around them: consider the broader trend, the momentum and other filters to make a low-risk entry.

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