In this article, you will learn what is the meaning of bullish harami. A candlestick chart is a type of chart used to track the performance of a security, named for the rectangular shape depicted in the chart, with lines protruding from the top and bottom, which resembles a candle and wicks.
What is the Meaning of Bullish Harami?
A bullish harami is a basic candlestick chart pattern indicating that a bearish trend in an asset or market may be reversing.
A bullish harami is a candlestick chart indicator suggesting that a bearish trend may be coming to end. Some investors may look at a bullish harami as a good sign that they should enter a long position on an asset.
The bullish harami indicator is charted as a long candlestick followed by a smaller body, referred to as a doji, that is completely contained within the vertical range of the previous body. To some, a line drawn around this pattern resembles a pregnant woman. The The word harami comes from an old Japanese word meaning pregnant.
For a bullish harami to appear, a smaller body on the subsequent doji will close higher within the body of the previous day's candle, signaling a greater likelihood that a reversal will occur.
What does the Bullish Harami Pattern Tell Traders?
An advanced technical trader can determine the activity of traders behind the candlestick chart by just looking at the price action. This ability will come with screen time only. It helps traders in determining the market conditions and in making accurate decisions.
The prior trend before the harami pattern will be bearish. It shows that sellers are dominant in the market, and the price is decreasing. Buyers are not strong enough to push up the price. So sellers start becoming weak when the price reaches a certain key support level and is in an oversold zone. Because they have used their full power, they are now becoming weak while buyers are becoming strong.
So at a specific key support level, when buyers are strong enough to push up the market, market makers make a big bearish move in the form of a big bearish candlestick to capture retail traders. Then a small candlestick inside the range of the previous candle formed. It shows that market makers are deciding either to continue the bearish trend or take a trend reversal. After this decision phase, the price will break the inside candlestick in a bullish direction, confirming the bullish trend reversal in the market.
When these two bullish trend reversal confluences meet up, the probability of trend reversal increases. And we will benefit from this price chart analysis by trading with market makers in the bullish direction.
Bottom Line
The Harami pattern is a candlestick pattern that every trader should use in technical analysis trading. This article is about what is the meaning of bullish harami.
