What is Harami?
In short
A two-candle pattern: a large candle followed by a small one whose body sits inside the first body. It shows the move has paused; weaker than an engulfing and needs confirmation.
Also known as: inside candle
A harami is a two-candle pattern: a large candle is followed by a small one whose body sits inside the first body. The Japanese word means "pregnant": the small candle "sits" inside the big one.
Types
- Bullish harami — after a decline: a large red candle, then a small (usually green) candle inside its body.
- Bearish harami — after a rally: a large green candle, then a small (usually red) one inside it.
- If the second candle is a doji, it is called a "harami cross" — stronger indecision.
What it means
The first candle shows a strong move; the second shows the move suddenly stopped: price didn't escape the previous day's body. It hints that momentum is fading, but it is not the reversal itself.
Compared with engulfing
In an engulfing pattern the second candle fully "swallows" the first — a strong signal. In a harami it's the opposite: the second candle is small, so the pattern is weaker and needs confirmation: in the next candles price should break beyond the small candle against the prior trend. The full-range version of the harami is the inside bar.
Green background — bullish hint, red — bearish. Engulfing: the second body fully covers the first. Harami: a small second body inside the first. Piercing line and dark cloud cover: the second candle closes past the middle of the first body. Tweezer top: two candles share the same high ($107.40).
Example
Illustrative (bullish harami): a stock is in a decline. Day 1: open $70.00, close $64.00 — a large red candle with a $6.00 body. Day 2: open $64.80, close $66.00, high $66.50 — a green candle.
- Day 2's body ($64.80–$66.00) sits inside day 1's body ($64.00–$70.00) — a harami.
- Body ratio: $1.20 ÷ $6.00 = 20%.
For confirmation many traders wait for a close above day 2's high ($66.50). If day 3 closes at $67.30, there is confirmation; the stop typically goes below day 2's or day 1's low.
Mistakes and tips
Don't treat a harami as a reversal by itself — it only says "the move paused". Wait for confirmation.
The first candle should be genuinely large: two average candles are not a harami, just noise.
A harami near key support or resistance means far more than one in the middle of a range.
Frequently asked questions
- Is the harami candlestick pattern reliable?
- Moderately. It is weaker than an engulfing pattern, so most traders use it only with confirmation and context (trend, level, volume).
- Is a harami the same as an inside bar?
- Close, but not quite. A harami looks at bodies, while an inside bar requires the second candle's whole range, wicks included, to fit inside the first.
Learn it in the Academy
This term is covered with hands-on examples and a quiz in these lessons of the interactive course.
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