What Is a Bearish Harami?

A bearish harami is a two bar Japanese candlestick pattern that suggests prices may soon reverse to the downside. The pattern consists of a long white candle followed by a small black candle. The opening and closing price🙈s of the second candle must be contained withi⛄n the body of the first candle. An uptrend precedes the formation of a bearish harami.

This can be contrasted with a 澳洲幸运5官方开奖结果体彩网:bullish harami.

Bearish Harami Explained

The size of the second candle determines the pattern's potency; the smaller it is, the higher the chance there is of a reversal occurring. The opposite pattern to a bearish harami is a bullish harami, which is preceded by a downtrend and suggests prices may reverse to the upside.

Traders typically combine other technical indicators with a bearish harami to increase the effectiveness of its use as a trading signal. For, example, a🔯 trader ꦯmay use a 200-day moving average to ensure the market is in a long-term downtrend and take a short position when a bearish harami forms during a retracement.

Trading a Bearish Harami

Price Action: A short position could be taken when price breaks below the second candle (harami candle) in the pattern. This can be done by placing a stop-limit order slightly below the harami candle's low, which is ideal for traders who don't have time to watch the market, or by placing a market order at the time of the break. Depending on the trader's appetite for risk, a stop-loss order could be placed above either the high of the harami candle or above the long white candle. Areas of 澳洲幸运5官方开奖结果体彩网:support and resistance might be used to set a profit target.

Indicators: Traders can use technical indicators, such as the relative strength index (RSI) and the 澳洲幸运5官方开奖结果体彩网:stochastic oscillator with a bearish harami to increase the chance of a successful trade. A shorꦯt position could be opened when the pattern forms and the indicator gives an overbought signal. Because it is best to trade a bearish harami in an overall downtrend, it may be beneficial to make the indicator's setting more sensitive so that it registers an overbought reading during a retracement in that trend. Profits could be taken when the indicator moves back into oversold territory. Traders who want a larger profit target could use the same indicator on a larger time frame. For example, if the daily chart was used to take the trade, the position could be closed when the indicator gives an oversold reading on the we♋ekly timeframe.