A harami candlestick pattern is a two-candle reversal pattern in which a small candle forms completely inside the real body of the much larger candle before it. The name comes from the Japanese word for pregnant, and the shape is exactly that: a large mother candle with a small one held inside it.
A bullish harami appears at the bottom of a downtrend and points to a possible move higher. A bearish harami appears at the top of an uptrend and points to a possible move lower. Both versions are read the same way and traded the same way, in opposite directions.
The harami tells you the trend has lost momentum. It does not tell you a reversal has begun, and that distinction is what separates traders who use the pattern well from traders who lose money on it.
What Is a Harami Candlestick Pattern?
A harami candlestick pattern is a two-candle formation that signals a possible trend reversal. The first candle has a long real body pointing in the direction of the existing trend. The second candle is much smaller and both its open and its close fall inside the first candle's real body.
Both candles are required. A single small candle after a large one means nothing on its own; it only becomes a harami when it sits inside the previous body.
The harami pattern works in either direction. At the bottom of a downtrend it reads as bullish. At the top of an uptrend it reads as bearish. The same shape appears on forex pairs, gold, indices and shares, and on every timeframe from the one-minute chart to the weekly.
What the two candles describe is a shift in participation. The first candle is the trend at full strength: one side is in control and price closes a long way from where it opened. The second candle is that same side failing to find anyone left to trade against.
Price opens inside the previous range and stays there. Nobody defends the extreme and nobody pushes it further. The flow that drove the last candle has dried up.
Whether the other side is strong enough to take over is a separate question, and the harami does not answer it. A trend can stall, drift sideways for a week and then continue.
What Does Harami Mean in English?
Harami is the Japanese word for pregnant. Japanese rice traders named the pattern after the shape on the chart: the long first candle is the mother and the small second candle is the baby held inside her, it resembles a pregnant woman. That is the whole of the etymology, and it is worth knowing mainly because it makes the containment rule easy to remember.
What Does a Harami Candlestick Look Like?
The harami is usually described over two sessions, Day 1 and Day 2.
Day 1 is a long candle in the direction of the trend. It should stand out against the candles around it. A first candle of merely average size gives you nothing meaningful to measure the second candle against.
Day 2 is a short candle whose open and close both fall inside Day 1's open and close. The smaller that second body is relative to the first, the sharper the stall it represents.
Containment is measured between the two real bodies, and this is the detail most descriptions get loose about. The second candle's wicks are allowed to poke above or below the first candle's high and low. Only the open and the close have to sit inside.
Almost every guide also requires the two candles to be opposite colours: a green candle followed by a red one, or a red followed by a green. That convention is how the pattern is taught, how most screeners filter for it, and it does produce the cleaner signal.
The classical definition is looser. It asks only that the second real body sits inside the first. A small green candle inside a large green candle qualifies as a harami by that definition, but it carries far weaker information because the buyers never lost control of the session. Read same-colour haramis as a pause in the trend rather than a warning of a reversal.
What Is a Hidden Harami Candle?
A hidden harami is the near-miss version. The second candle's body is too big to fit inside the first candle's body, but the whole candle still sits within the first candle's high-to-low range.
So it fails the body-containment test and passes the range test. Traders who screen high to low will flag it; traders who screen open to close will not, which is why the same chart produces different harami counts depending on whose definition is running.
Treat it as a weaker cousin. The stall is real, since price never left the previous candle's range, but a second body that large means the opposing side still had enough size to move the market. Demand the same confirmation and expect more of these to fail.
What Is a Bullish Harami Candlestick Pattern?
A bullish harami candlestick pattern forms at the bottom of a downtrend. The first candle is a long bearish candle that often prints a new low for the move. The second is a small bullish candle that opens above the first candle's close and closes inside its body.
The sequence says sellers pushed hard on the first candle and then failed to follow through on the second. Price stopped making new lows and spent the whole session inside the previous candle's range.
A bullish harami candle carries more weight when it forms at a level that already mattered: a prior swing low, a round number, or a support zone that has held before.
How to Spot a Bullish Harami Candle on a Chart
Four checks, in order:
A downtrend is already in place, with lower highs and lower lows on the timeframe you are trading.
The first candle is bearish and visibly longer than the recent average.
The second candle is bullish, and both its open and its close fall inside the first candle's body.
The second body is small relative to the first. Once it exceeds roughly half the size of candle one, the stall is too shallow to be worth acting on.
What Is a Bearish Harami Candlestick Pattern?
A bearish harami candlestick pattern is the mirror image. It forms at the top of an uptrend, where the first candle is a long bullish candle and the second is a small bearish candle contained inside it.
Buyers drove the first candle to a new high and then could not extend it. The second session opens lower, trades in a narrow range and closes below its open, all without leaving the previous candle's body.
A bearish harami candle is most useful when it appears into resistance, at a prior high, or after an extended run where the move is already stretched.
How to Spot a Bearish Harami Candle on a Chart
The same four checks, reversed:
An uptrend is already in place, with higher highs and higher lows.
The first candle is bullish and visibly longer than the recent average.
The second candle is bearish, and both its open and its close fall inside the first candle's body.
The second body is small relative to the first.
The table below sets the two versions side by side.
What Is a Bullish Harami Cross?
A bullish harami cross is a harami whose second candle is a doji. The doji opens and closes at almost the same price, so it prints as a cross rather than a body.
The reading is the same as a standard bullish harami, only sharper. A small body says the sellers slowed down. A doji says they stopped, and that neither side could close the session in its favour.
A bearish harami cross is the same structure at the top of an uptrend, with a doji sitting inside a long bullish candle.
Both versions need exactly the same confirmation as the standard pattern. A doji is an indecision candle, and indecision resolves in either direction. Doji construction has enough depth to deserve its own read; for the harami cross, the only rule that changes is that the second candle's body is effectively zero.
How Do You Confirm a Harami Candle Before Entering a Trade?
Confirmation is the third candle. For a bullish harami, you want a candle that closes above the first candle's open. For a bearish harami, you want a close below the first candle's open. Until that happens, all the market has done is pause.
Three further checks tighten the signal.
Location. The pattern needs to form at a level you had already marked before it appeared: support, resistance, a prior swing point, or a trendline. Location does more work here than the candles themselves.
Momentum. RSI or the stochastic oscillator sitting at an extreme and turning adds weight. A bullish harami with RSI below 30 and curling up is a very different proposition from one with RSI at 50. MACD is slower and works better as a higher-timeframe filter than as a trigger.
Volume. The falling volume on the second candle fits the story of fading participation. Rising volume on the confirmation candle is what you want to see next.
Volume needs one caveat in forex. Spot FX has no central exchange, so the volume figure on your chart is tick volume, which counts price updates rather than contracts traded. It tracks real activity closely enough to compare one candle against the next, but it is not the same measurement you get on an equity or futures chart.
How Do You Trade the Harami Candlestick Pattern?
The pattern hands you a ready-made trade structure. Candle one sets the stop and candle two sets the trigger. Five steps turn that into an order.
Step 1: Identify the Prevailing Trend
The harami is a reversal pattern, so it needs a trend to reverse. Mark the trend on the timeframe you intend to trade and on one timeframe above it. A bullish harami inside a 4-hour downtrend is a setup. The same shape inside a sideways range is noise.
Step 2: Confirm With Volume and Momentum
Wait for the confirmation candle to close beyond the first candle's body. Check that momentum agrees and that the pattern sits at a level you had already marked. Skipping this step is the single most common reason harami trades fail.
Step 3: Enter the Position
For a bullish harami, enter on the close of the confirmation candle or on a buy stop placed just above the second candle's high. For a bearish harami, enter on the close or on a sell stop just below the second candle's low.
Entering on the close of candle two itself is early. At that point you have evidence of a stall and no evidence of a turn.
Step 4: Set Your Stop-Loss
For a bullish harami, place the stop below the low of the first candle. For a bearish harami, place it above the first candle's high. Add a buffer for the spread and for the noise that collects around round numbers.
This is where the harami costs you. The first candle is long by definition, so the stop sits a long way from the entry. On volatile instruments that distance can be wide enough to make the trade unattractive before you have placed it. Size the position from the stop distance rather than forcing the stop to fit the position.
Step 5: Set Your Take-Profit
Set the target from the stop distance and a fixed risk-reward ratio, or from the nearest structural level: the previous swing high for a bullish harami, the previous swing low for a bearish one. If that level sits closer than your minimum risk-reward allows, the setup does not qualify and you skip it.
Position size and pip value both feed into that calculation. TMGM's trading calculators handle the arithmetic before the order goes in.
Worked Example: Trading a Bullish Harami Pattern on EUR/USD
EUR/USD has been falling for five sessions on the 4-hour chart.
Candle 1 is bearish: opens at 1.0850, closes at 1.0790, low of 1.0782. A 60-pip body, well above the recent average.
Candle 2 is bullish: opens at 1.0805, closes at 1.0828, high of 1.0834. Both the open and the close sit inside 1.0790 to 1.0850, so the harami is valid.
Candle 3 closes at 1.0862, above candle 1's open. That is the confirmation.
Entry on the confirmation close at 1.0862. Stop at 1.0775, seven pips below candle 1's low, for 87 pips of risk. At 2:1 the target is 1.1036.
Note the size of that stop. An 87-pip risk on a 4-hour setup is large, and it is a direct consequence of candle one being long. Entering on a buy stop just above candle 2's high at 1.0836 cuts the risk to 61 pips, at the cost of taking some trades that never get confirmed.
Worked Example: Trading a Bearish Harami Pattern on XAU/USD
Gold has run up for six sessions on the daily chart, into a prior high near $2,380.
Candle 1 is bullish: opens at $2,340, closes at $2,372, high of $2,376.
Candle 2 is bearish: opens at $2,368, closes at $2,356, low of $2,352. Both sit inside the $2,340 to $2,372 body.
Candle 3 closes at $2,334, below candle 1's open. Confirmed.
Entry at $2,334. Stop at $2,379, just above candle 1's high, for $45 of risk per ounce. At 2:1 the target is $2,244.
Gold moves fast enough that a $45 stop on a daily setup is normal rather than extreme, but the position size has to reflect it. That same $45 distance means a very different amount of money on a 0.10-lot position than on a 1.00-lot position, and the harami gives you no say in how wide the distance is.
Both examples use illustrative prices to show the mechanics. They are not trade signals.
What Are the Benefits and Limitations of the Harami Pattern?
Benefits of the Harami Pattern
It appears early. The harami warns you while the trend is stalling, before price has turned, which is earlier than most reversal patterns fire.
It defines the stop for you. Candle one's high or low is an unambiguous invalidation level, so you never have to guess where the idea is wrong.
It is easy to identify. Two candles and one containment rule, with no calculation and no indicator settings to argue about.
It transfers across markets. The same reading applies on a daily gold chart and on a 15-minute EUR/USD chart.
Limitations of the Harami Pattern
The stop is wide by default. A long candle one means a distant invalidation level and a smaller position for the same risk.
It says nothing about size. The pattern signals a stall, with no indication of whether what follows is a 20-pip pullback or a change of trend.
It performs poorly on fast charts. On a 1-minute or 5-minute chart, a small candle inside a large one is usually spread and noise rather than a genuine shift in participation.
It is unreliable in strong trends. Powerful moves produce dozens of haramis on the way, almost none of which reverse anything.
What Mistakes Do Traders Make With the Harami Candle Pattern?
Trading it without an existing trend. The harami needs something to reverse. Inside a range, a small candle after a large one is just a quiet session.
Ignoring where it forms. A harami at a tested support level and a harami in the middle of nowhere look identical on the chart and behave completely differently.
Entering on candle two. The second candle is the signal, not the trigger. Acting on its close means trading a stall with no evidence of a turn.
Putting the stop inside the pattern. Tucking the stop just under candle two makes the risk look better on paper and puts it directly in the noise. If the full stop distance is too wide for the account, the answer is a smaller position, not a closer stop.
Trading it on a chart that is too fast. Below the 15-minute chart the pattern appears several times an hour, and most of those are spread artefacts.
Skipping volume. Falling volume on candle two supports the reading. Flat or rising volume suggests the trend still has participants and the stall is temporary.
Harami Candle vs Engulfing Pattern: What Is the Difference?
Both are two-candle reversal patterns and both involve one body sitting inside another. The order is what separates them.
In a harami, the small candle comes second and sits inside the large one. In an engulfing pattern, the small candle comes first and the large one swallows it.
That ordering changes the message. The harami shows momentum draining away. The engulfing shows the other side actively taking control inside a single session, which is why it is treated as the stronger of the two signals.
Forex traders who came to candlesticks through price action will recognise the harami under another name. A candle whose entire range sits inside the previous candle's range is an inside bar, and the harami is the same idea measured body to body rather than high to low. That makes the harami the looser of the two definitions, because a harami's wicks are free to break the previous range while an inside bar's are not.
Why Trade Harami Candlestick Setups With TMGM?
TMGM is regulated by ASIC, a tier-1 regulator, and holds additional licences with the VFSC, the Seychelles FSA and the Mauritius FSC. The business has operated since 2013 and holds client funds in segregated accounts.
For candlestick work, the platform matters as much as the pattern. TMGM has MT4, MT5 and the TMGM app, each carrying the timeframes, drawing tools and order types you need to mark a harami and place a stop against it. Market, limit and pending orders are all supported, which covers both the confirmation-close entry and the stop-order entry described above.
Other features that apply to this kind of trading:
12,000+ CFD products, including major and minor forex pairs, gold, indices and shares.
A minimum deposit of about ₹9,154.
Negative balance protection on ASIC retail CFD accounts.
Copy trading, plus AI tools including Market Buzz and AI Arena.
Market insights and news built into the TMGM app.
A free demo account for testing pattern-based entries without risking capital.
Islamic swap-free accounts.
Funding by bank transfer, card and e-wallet. E-wallet withdrawals are processed within 24 hours, bank transfers in 2 to 5 business days and international wires in 3 to 5 business days.
24/7 multilingual phone and email support for clients in India.
Harami Candlestick Pattern FAQs
Is the Harami Candlestick Pattern Reliable?
On its own, no. The harami identifies a stall in momentum and nothing more, and stalls resolve in both directions. It becomes useful when it forms at a level that already mattered, when the third candle closes beyond candle one's body, and when momentum agrees. Traded as a standalone signal it produces a high number of false starts.
Which Is Stronger, a Harami or a Harami Cross?
The harami cross is the stronger of the two. Its second candle is a doji, meaning the session opened and closed at effectively the same price, so the loss of momentum is complete rather than partial. Both still need the same confirmation before you act on them.
What Timeframe Works Best for the Harami Candle Pattern?
The 4-hour and daily charts. Both filter out the small candles that appear constantly on faster charts, and both carry enough participation behind them for the stall to mean something. Below the 15-minute chart the pattern appears too often to be selective, and the spread makes up too much of the second candle's bod
