The Bullish Harami is a two day candlestick pattern that signals a potential trend reversal.

Bullish Harami candlestick pattern

Day 1 is a long red day. Day 2 is a short candlestick day whose body is engulfed by day 1’s body.

The psychology of the pattern is that a long candlestick forms on day 1 with high volume and confidence by bears that the pullback or downtrend will continue. Suddenly, day 2 shocks the bears because it trades in a small range within the previous day’s real body. Light volume on day 2 raises concerns with bears of an impending change of trend. If day 3 closes even higher than day 2, bears will freak out and cover existing short positions which will push the market higher.

<< Back to Glossary Index