Harami (Bullish and Bearish)

What is a harami candlestick pattern?

A harami candlestick pattern is a two-candle pattern in which a small real body sits entirely inside the larger real body of the candle before it. A bullish harami forms after a decline and a bearish harami after an advance. The contraction marks a pause in the trend, and the setup activates only when a later candle confirms through a chosen level.

The displayed examples use opposite body colours, consistent with Fidelity’s harami illustration. The bullish pair is down then up, while the mirrored bearish pair is up then down. The one-third body-size cap below is this page’s selected filter, not a universal harami requirement.

Harami rules: body containment and size

Require max(O2,C2) ≤ max(O1,C1) and min(O2,C2) ≥ min(O1,C1). These conditions place the second body inside the first.

For a positive first body, divide second-body length by first-body length. This example caps the ratio at one-third, and the prior trend sets the direction: after a decline the pattern reads bullish, after an advance bearish.

A harami cross uses a Doji as the second candle. An exactly equal open and close give a zero second body; a near-equal doji uses the selected tolerance.

Harami vs inside bar

An inside bar compares complete high-low ranges. Harami compares bodies and adds the selected contraction test.

The displayed harami fails the inside-bar test because its $48.80 low pierces the prior $48.95 low. A candle can also stay inside a prior high-low range while opening and closing outside that prior body, so run both tests.

How to trade a harami: confirmation and stop levels

The next candle closes at $52.20 above the small candle’s $51.20 high. This completes the example’s closing trigger. The first candle’s $53.10 high remains above that close.

Take the minimum of both lows and maximum of both highs to define the full pattern range: $48.80 to $53.10 here. Use the selected level for invalidation, then calculate position size from the actual entry plan.

A trader who buys the intrabar break instead enters at $51.21, just above the small-candle high, with a stop at $48.79 just below the pattern low: a $2.42 risk per share.

Locate the pattern at Support or Resistance. Then filter Options Flow to the ticker for ask-side buying in the direction of the turn, and read each structure’s payoff at the $48.79 stop and at your target in the Options Profit Calculator.

Limitations of the harami pattern

• Let the confirming close set the direction. A harami records contraction, and until that close prints, the next candle can break either way.
• Write the rule set into the scan. The one-third body cap, the colour condition and the doji tolerance differ between sources, and harami and inside-bar scans overlap without matching.
• Size from the full two-bar range. The small body can sit inside a much wider range, $48.80 to $53.10 here, so a stop beyond the full pattern can be far from the entry.
• Pick the confirmation level before the next candle. The example’s $52.20 close clears the $51.20 small-candle high but not the $53.10 two-bar high.
• Read both candles on one interval and session, since a different setting draws different bodies.

Bottom line

A harami marks a sharp contraction after a trend: a small body inside the prior large body. Act on it once price confirms beyond the small candle or the full two-bar range, favor patterns at support or resistance, and size the trade from the chosen stop.