The Bullish Harami pattern (the reverse of the Engulfing Pattern) is a small green candlestick, which is contained with a prior relatively long red candlestick. The formation is comparable to Inside Day pattern (see NR4 ID). The pattern is more significant if the second candlestick is a Doji. Harami pattern without a Doji is usually not as much of a significant reversal signal as the Engulfing pattern.
The heavy selling is reflected by first day’s long red candlestick, and then it is followed by the small green candlestick which implies uncertainty. This could indicate a trend reversal since the bears’ power has diminished.
- The smaller the second candlestick the stronger the reversal signal.
[Real-Time Stock Chart via Daily Stocks for iPad]
The Bullish Harami pattern is included in our Daily Stocks iPad and Japanese Candlestick iPhone apps.
For a full list of Japanese Candlestick Patterns tracked by these apps visit our Japanese Candlesticks Page.