The most successful traders don’t see harami patterns as geometric shapes on a chart—they see them as emotional stories unfolding in real time. Each pattern represents thousands of individual trading decisions, collective moments of doubt, and the gradual shift from one dominant emotion to another. Netflix provided an excellent example of how harami patterns work in reverse during May 2024, when a bearish harami formed on the daily chart. While this was the opposite of a bullish harami, it demonstrates the pattern’s reliability in both directions. Raw statistics can be misleading because they don’t account for the market conditions that make patterns more or less likely to succeed. A bullish harami appearing after a stock has fallen 50% near major support carries far more weight than one appearing during a minor pullback in a sideways market.

While this approach sometimes works, it ignores the nuanced reality of how professional traders actually use harami patterns. The difference between profitable and unprofitable harami trading often comes down to entry timing, risk management, and understanding when to ignore the textbook rules entirely. In the rice markets of 18th-century Japan, traders developed a visual language so intuitive that they named one of their most reliable patterns after pregnancy. The bullish harami—literally meaning “pregnant” in Japanese—captures the exact moment when a market stops falling and prepares to give birth to a new uptrend. What these ancient traders understood, and what modern algorithms still struggle to replicate, is that markets move in patterns that reflect the deepest aspects of human psychology. The data shows us that the patterns likely mean volatility is incoming and that traders should go against the grain and listen to the data instead of trading like everyone else.

Trading strategies using the Bullish Harami

Since the harami is a two-candle pattern, many traders will look for confirmation with subsequent candles. The third candle, just after the harami, can make all the difference. If it closes strongly above the high of the pattern, or even just the second inside candle, that’s a sign that buyers are stepping in and a bullish reversal may be underway.

Bullish Harami Candlestick: Definition, Formation, Trading, Advantages, and Disadvantages

ATAS platform testing also reports confirmation rates above 70% in trending conditions. TradingWolf’s studies report a 75% success rate for trend continuation with Rising Three. LiberatedStockTrader also ranks it above average for reliability in trending markets. Traders see the Rising Three as confirmation that a trend is healthy and resilient.

How to Trade Bullish Harami Candles

Rooted in classic Japanese candlestick theory, Inverted Hammer has been interpreted for centuries as a sign of buying interest at lower levels. Western traders adopted it as a cautionary reversal candidate—especially when confirmed by a follow-up bullish candle. The hammer pattern has been recognized in Japanese candlestick charts for centuries, symbolizing the idea of “nailing down” the bottom.

The Bullish Harami candlestick pattern typically appears after a consistent downtrend. As said above, this pattern consists of a bullish candle following a bearish bullish harami candle one. Bullish harami is a candlestick pattern indicating a potential uptrend in an ongoing bear market. A Bullish Harami candle is a two-candle pattern where the first candle is larger with a bearish body, and the second is smaller with a bullish body.

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  • This pattern forms when both bulls and bears push prices significantly during the session, but neither side manages to dominate.
  • If the Harami has formed near a high-volume node (HVN), it suggests strong institutional interest.
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Generally, while it can work, the pattern is less accurate when used on its own. Finally, there is the risk of mistakenly confusing an inside bar with a bullish harami. This is particularly common among newer traders who have yet to gain enough experience to effectively differentiate between the two patterns.

How common is the bullish harami candlestick pattern?

The Doji amplifies the significance of the reversal, showing that sellers have lost their grip completely before buyers take over. For this reason, traders often prioritize it over the standard Morning Star. Morning Star Doji is a variation of the Morning Star where the middle candle is a Doji instead of a small-bodied candle.

The pattern’s effectiveness depends heavily on volume confirmation, proximity to support levels, and the overall market environment. CandleScanner’s extensive study of S&P 500 stocks from 1995 to 2015 found 27,862 bullish harami patterns, with a frequency of 4.4% and a false signal probability of 19% within five days. While this sounds promising, only 37% achieved “strong results” in the same timeframe. Before you get too excited about this ancient Japanese wisdom, let’s talk about what the cold, hard data actually tells us about bullish harami patterns. While the visual appeal and psychological logic are compelling, the statistical reality is more nuanced than most trading books would have you believe.

The bullish harami candlestick pattern is a subtle yet powerful tool in a trader’s arsenal. It quietly signals shifting momentum at the end of downtrends or uptrend pullbacks with growing buyer interest. The bullish harami is a significant candlestick chart pattern that can signal a potential reversal in a bearish market trend. It consists of a smaller candle, known as a doji, within the range of a larger previous candle, which suggests rising buying pressure.

Unlike other technical indicators that rely heavily on price, volume is independent of price, making it one of the most essential concepts to understand in trading. As a rule of thumb, when a bullish harami pattern occurs, we want to see above-average volume on the second candle (the small bullish candle), which is the case in this illustration. This is because the significant volume, coupled with the jump in price (gap up), shows that buyers are starting to gain control.

  • Bullish Harami comprises a small bullish candle entirely within the prior larger bearish body.
  • These patterns are two candlestick patterns found on charts; this pattern signals the reversal of a bearish downtrend.
  • A bullish candlestick represents a session where the closing price is higher than the opening price.
  • Candlestick patterns can often help traders pinpoint the start of an upcoming price reversal.
  • The trading psychology behind a Bullish Harami is key to understanding the pattern.

Entering this setup soon after it appears is risky, as it may be a false signal. The bullish harami indicates shifting momentum from bearish to bullish in a particular move. The appearance of an opposite candle would indicate that the current momentum is slowing down. Traders would enter a long position as the price breaks above the high of the bullish candle.

And while volatility works for these patterns, it’s best to go bearish in the forex and crypto markets. With the pattern set, savvy stock traders wait for the price to cross below the pattern’s low and enter long when prices come back up through that low with a stop loss of one ATR. We then see a large bearish candle followed by a small-bodied candlestick.

Volume Profile gives you insight into where the market participants are most active. After spotting a Bullish Harami near the end of a downtrend, open the Volume Profile for the recent swing or range. If the Harami has formed near a high-volume node (HVN), it suggests strong institutional interest. 📌 The crossover must happen either during or within a few candles after the Harami formation to count as real confirmation. The smart money move is to wait for a confirmation candle after spotting Bullish Harami. We want to see a third candle that closes above the high of the baby candle.