The second candle is bullish, indicating buyers have stepped in and pushed prices back up from their earlier lows. It shows up in an uptrend, with a large bullish candle followed by a smaller bearish one inside the prior body. Both patterns are about potential turning points, just in opposite directions. Most trading books will tell you to buy when the price breaks above the second candle’s high and place your stop below the first candle’s low.

The appearance of this pattern hints at a weakening of the bullish sentiment and the possibility of a downward trend. Just like with the bullish harami, traders should always use other technical indicators for confirmation before deciding to trade based bullish harami candle on this pattern. While this article focuses on the bullish harami candlestick pattern, it’s worth mentioning its counterpart, the bearish harami pattern. Instead of indicating a bullish reversal after a downtrend, a bearish harami indicates a bearish reversal after an uptrend. The bullish harami pattern teaches us something profound about markets that extends far beyond candlestick formations. After centuries of technological advancement, algorithmic trading, and sophisticated analysis tools, the fundamental drivers of market behavior remain remarkably unchanged.

Yes, the bullish harami works as a reversal pattern to initiate a potential uptrend (from a downtrend) or continue upward momentum (from a pullback). Therefore, to be profitable, it’s crucial to have sound risk management in place to ensure you do not incur significant losses when the pattern fails. The bullish harami, being a two-candlestick pattern, is one of the most common candlestick patterns observed on the price charts. This is because, in general, two-candlestick patterns appear more frequently than three-candlestick patterns or higher.

Related Patterns to Bullish Harami’s

• If the MACD line rises during the pattern formation and crosses the signal line from below, it boosts the likelihood of a market reversal.
• The bullish harami is traded optimally using a bullish mean reversion strategy in the stock market and a bearish mean reversion trading strategy in the crypto and forex markets.
• A harami that forms on rising bullish volume on the second candle, can suggest stronger buying interest.
• Our data proves the Bullish Harami Cross has upside predictive qualities.

A bullish harami pattern is a signal for a bullish reversal that occurs at the end of a prolonged downtrend. The initial candle in the pattern, after the preceding downtrend, is a large red candle indicating that the bears are dominating and driving the prices lower. The second candle in the pattern will be a small green candle starting with an opening price above the previous candle’s closing price. The RSI bullish divergence confirms weakening momentum, volume spikes slightly on the green candle and a strong downtrend is obvious. 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.

The second should be a green bullish body with an open price lower than its close price. Yes, the Bullish Harami Cross is among the most profitable candle patterns. Our testing shows it has an average return of 0.58% across 1,609 trades spanning 568 years of test data.

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Also, remember to use other technical indicators to confirm the potential reversal signaled by a bullish harami. The difference between a bullish and a bearish harami cross lies in the second candle of the pattern. In a harami, the second candle is a small bullish candle that is completely contained within the first, large bearish candle. On the other hand, in a bullish harami cross, the second candle is a doji—a candlestick with nearly the same opening and closing prices—instead of a regular bullish candle. The doji symbolizes market indecision, which can make the potential trend reversal more significant. The bearish harami consists of a large bullish candle followed by a small bearish candle, with the second candle being within the real body of the prior candle.

• Don’t just read the charts, trade them with smart money strategies, AI analysis, and real-time alerts.
• Both the Bullish Harami and Bullish Harami Cross patterns are predominantly bullish and work if you buy long.
• For instance, a tweezer bottom—which is also a two-candlestick bullish reversal pattern—can effectively show a clear rejection of lower prices.

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Combining this candlestick pattern with indicators like moving averages or RSI can strengthen your trading strategy and improve your entry and exit points. While both patterns are valuable for spotting trend reversals, the Bullish Engulfing pattern is generally considered a more decisive and reliable bullish signal. The Bullish Harami Cross is also a candlestick pattern indicating a reversal in a downtrend. However, after spotting the bullish haram, you must verify the trend.

Robert has more than 30 years of experience in international financial markets and public accounting. Prior to Bullish, he was the Group Chief Financial Officer at Sun Hung Kai & Co. Previously, Robert served as Chief Financial Officer, Asia for the Macquarie Group Limited based in Hong Kong, and Chief Operating Officer for Macquarie in Korea.

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Bullish kicker represents a sudden, sharp shift in market sentiment. Japanese traders introduced this as a safer alternative to the Harami pattern, requiring confirmation for reliability. It gained wider use in Western analysis for reducing false signals.

Once the first candlestick closes, the next shorter bullish candlestick emerges. The body of the smaller candlestick is contained within the body of the preceding one, which is the main sign of a Harami pattern. Therefore, the main difference between a Bullish Harami Cross and a regular bullish Harami candlestick is that in the former case, the second candle is a doji. This feature strengthens the signal, as a doji candle represents market uncertainty and a balance of power between buyers and sellers. When this pattern appears during a downtrend, it can signify a notable shift in momentum. This formation signals a weakening of the current trend and suggests a potential reversal.

The pattern captures the exact moment when selling exhaustion meets tentative buying interest, when fear begins to give way to cautious optimism. Modern traders who understand this psychological underpinning can use the bullish harami to identify potential reversal points with remarkable accuracy. The bearish harami candlestick pattern is the opposite of its bearish kin.

She has managed finance departments in brokerage firms, supervised master’s theses, and developed professional analysis tools. Nathalie Okde is an SEO content writer with nearly two years of experience, specializing in educational finance and trading content. Nathalie combines analytical thinking with a passion for writing to make complex financial topics accessible and engaging for readers. While it’s easy to identify and provides clear entry points, confirming the signal with additional indicators for increased reliability is essential. These confirmations can provide additional confidence that the market is reversing upwards, making it a good time to consider entering a long position. MACD can show whether the market is gaining bullish momentum, while RSI helps identify overbought or oversold conditions.

No Confirmation Candle

The image above shows an initial market downtrend as represented by the black downward arrow. The image shows the bullish harami pattern with the two candlesticks including the long bearish candle and short bullish candlestick following it. The image depicts that the bullish harami forms at the end of a prolonged bearish trend.

The bearish mean reversion trading setup is the mirror opposite of its bullish brethren. Let’s use history as our guide and learn how to trade these two candlesticks profitably. In the above Microsoft chart, the trade made money, but these unsophisticated traders are going against what history tells us.

Each candle opens within the body of the previous one and closes near its high, showing sustained buying. LiberatedStockTrader’s backtesting found Morning Star patterns achieved 63% winning trades with average returns of 0.47% over 10 sessions. TradingWolf notes 65–70% accuracy when confirmed with high volume or occurring after extended downtrends.