A harami is a two-candle pattern where a small candle's body sits entirely inside the prior, larger candle's body. It's the mirror image of an engulfing pattern — instead of the new candle swallowing the old, it contracts within it. That contraction signals the prevailing momentum is stalling.
Bullish and bearish
A bullish harami appears after a downtrend: a large down-candle, then a small up-candle inside it — sellers pushed hard, then suddenly lost their grip. A bearish harami appears after an uptrend: a large up-candle, then a small candle inside it — buyers ran out of room. The small second candle is the market catching its breath.
Hesitation, not reversal
Critically, a harami signals indecision, not a confirmed turn. The shrinking range says the trend's force is fading, but fading isn't reversing. Like a doji, it's a heads-up that needs the next candle to confirm a real change of direction. Acting on the harami alone is jumping the gun.
A harami whispers that the trend is tired. It takes the next candle to say whether it actually turns.
Using it
Haramis matter most at extended moves and real levels, confirmed by a follow-through candle and ideally fading volume into the pattern. Mid-range, a small candle inside a big one is just noise. As with every candlestick, it's a piece of context about who's losing control — one input, weighed against structure and regime, never a standalone signal.
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