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Definition: Bullish Harami Pattern is characterized by a small white real body contained within a prior relatively long black real body. “Harami” is an old Japanese word for “pregnant”. The long black candlestick is “the mother” and the small candlestick is “the baby”. Recognition Criteria: 1. The market is in a bearish mood characterized by downtrend. Explanation: The Bullish Harami Pattern is a sign of disparity about the market’s health. While the market is characterized by downtrend and bearish mood; there is heavy selling reflected by a long, black real body however it is followed by a small white body in the next day. This may signal a trend reversal since the second day’s small real body shows that the bearish power is diminishing. Important Factors: The decisive fact about this pattern is that the second candlestick has a minute real body relative to the prior candlestick. Furthermore this small body is completely inside the larger one. The Bullish Harami Pattern does not necessarily imply that a rally will follow. Market usually enters into a congestion phase following the Bullish Harami. We may need a third day confirmation to be sure that the downtrend has really reversed. This confirmation of the trend reversal may be signaled by a white candlestick, a large gap up or by a higher close on the third day. |