Harami Pattern

The harami is a two-candlestick reversal pattern that signals a potential shift in trend momentum when it forms at meaningful support or resistance levels. The name comes from the Japanese word for “pregnant,” describing the visual of a large candle containing a smaller one within its body. In forex, the bullish harami appears at the end of downtrends and the bearish harami at the end of uptrends — both signaling that the prevailing momentum is stalling. The pattern is most reliable on the 4-hour and daily charts, particularly when volume on the second candle contracts noticeably compared to the first.

How to Identify the Harami Pattern

1. Large first candle in trend direction — The first candle must have a substantial body, at least 1.5x the average candle size over the prior 10 bars. For a bearish harami, candle 1 is bullish; for a bullish harami, candle 1 is bearish. A weak first candle reduces the pattern’s significance.

2. Second candle body fully contained within candle 1 — The second candle must open and close within the range of the first candle’s body, not just its wicks. The body of candle 2 should be at least 25% smaller than candle 1’s body. If the second candle extends outside, it is not a harami — it may be an inside bar if the entire range is contained, but the body-containment rule is specific to the harami.

3. Contracting volume on the second candle — Volume on candle 2 should be measurably lower than candle 1, confirming that the dominant side is losing conviction. A harami with rising volume on candle 2 is a warning sign — it may indicate continuation rather than reversal.

4. Pattern location at structure — A harami forming at a prior swing high, swing low, Fibonacci level, or round number has substantially more value than one appearing mid-range. Without a structural reason for the reversal, the signal is noise.

5. Confirming third candle — The harami itself is indecision, not confirmation. Wait for the next candle to close in the reversal direction before treating the pattern as actionable.

Entry Rules

1. Wait for confirmation — Do not enter on the close of the second harami candle. Wait for candle 3 to close in the reversal direction: above the second candle’s high for bullish harami, below the second candle’s low for bearish harami.

2. Enter at confirmation close or structure pullback — Enter on the close of candle 3, or set a limit order at the midpoint of candle 1’s body if price retraces into the pattern after the breakout. The midpoint entry improves R:R from a typical 1.5:1 to 2:1 or better.

3. Volume check on confirmation — The confirming candle should have volume at least 1.2x the 20-bar average. A weak confirmation candle on low volume raises the probability of a failed reversal.

4. Structure alignment required — Only take the trade if the harami forms at an identifiable structural level. Check for confluence with fair value gaps, previous highs or lows, or key moving averages.

Exit Rules & Targets

1. Primary target: nearest swing point — For bullish harami, target the most recent swing high. For bearish harami, target the most recent swing low. In trending conditions, this typically represents 1.5-2.5R at minimum.

2. Secondary target: measured move — Project the height of candle 1’s body from the entry price. On EUR/USD, a first candle spanning 80 pips gives a projected target 80 pips from entry.

3. Trail to breakeven at 1R — Once price moves a distance equal to your initial risk, move stop to breakeven. This protects capital on winners that fail to reach full target.

4. Failed pattern exit — If price closes back inside the first harami candle’s body after entry, exit immediately. The pattern has failed and the prior trend may be resuming.

Target Calculation: Measure the body height of candle 1 in pips. Add that value to the entry price (bullish) or subtract it (bearish) to find the measured move target. For a bullish harami on GBP/USD where candle 1 runs from 1.2600 to 1.2680 (80-pip body), and entry is at 1.2695 (above candle 2 high), target is 1.2775.

Stop Loss Placement

Place the stop 5-10 pips beyond the wick extreme of the first harami candle — below candle 1’s low for a bullish harami, above candle 1’s high for a bearish harami. This level is appropriate because a close beyond it invalidates the reversal premise and suggests the trend is continuing. At this stop placement, the typical measured-move target delivers 1.5:1 to 2:1 R:R, depending on entry timing. Entering on a pullback to the pattern midpoint can push R:R toward 2.5:1 or higher.

Practical Example

On the daily chart of MSFT, a bearish harami forms after a rally from $390 to $415. On Tuesday, MSFT prints a strong bullish candle from $408 to $415, body height 7 points, on above-average volume of 28M shares. Wednesday opens at $413 and closes at $411 — a 2-point body fully inside Tuesday’s body, volume at 14M shares (half of Tuesday’s). Thursday opens lower and closes at $409, confirming the reversal.

Entry: $409 on Wednesday’s close (confirmation candle). Stop: $416 (5 points above Tuesday’s high). Primary target: $398 (prior swing low). Measured move target: $409 minus $7 (candle 1 body) = $402.

On a $25,000 account risking 1% per trade ($250), the 7-point stop allows 35 shares. At target $402, gain is $7 per share — $245 profit, approximately 1:1 R:R on measured move, 1.7:1 to the swing low at $398. A limit entry at the pattern midpoint ($411.50) would have reduced stop distance to 4.5 points and improved R:R to 2.1:1.

Best Timeframes for the Harami Pattern

The daily and 4-hour charts produce the most consistent harami signals in forex, with documented success rates of 55-60% when pattern location and volume conditions are met. On the 1-hour chart, signals are more frequent but less reliable — expect 45-50% success without additional confirmation from higher timeframe structure. Avoid trading haramis on the 15-minute chart and below; pattern frequency is too high and the signal-to-noise ratio collapses in active sessions. The daily chart is ideal for swing traders, while the 4-hour suits active intraday traders holding positions for 1-3 days. The doji and spinning top can appear as the second candle in a harami and reinforce the indecision signal.

Common Mistakes

1. Entering without confirmation — The harami signals indecision, not reversal. Traders who enter on the close of candle 2 frequently get stopped out when the trend resumes. Always wait for candle 3 to close in the reversal direction.

2. Trading haramis with no structure context — A harami in the middle of a range or in open air is low-probability noise. The pattern needs a reason to reverse — support, resistance, a Fibonacci confluence, or a previous swing point.

3. Accepting partial body containment — If candle 2’s body extends above or below candle 1’s body, it is not a harami. Strict body containment is the defining rule. Loose interpretation leads to lower-quality setups that underperform in backtesting.

4. Ignoring volume on candle 2 — Rising volume on the second candle is a continuation signal masquerading as a reversal. If the volume tells a different story than the candlestick, trust the volume.

How to Journal Harami Trades

Journal Field	What to Record	Why It Matters
Pattern Type	Bullish Harami / Bearish Harami / Harami Cross	Filter results by pattern subtype
Candle 2 Body Ratio	Percentage of candle 1 body covered by candle 2	Smaller ratios (under 40%) tend to produce better outcomes
Volume Ratio	Candle 2 volume as % of candle 1 volume	Confirm contraction; flag patterns where volume rose
Structure Level	Support / Resistance / Fibonacci / Round Number	Identify which structural contexts perform best
Entry Timing	Confirmation close / Pullback to midpoint / Early	Track whether confirmation entry outperforms early entry
R:R at Entry	Actual R:R based on stop and target	Filter for minimum 1.5:1 setups
Outcome	Win / Loss / Breakeven + pips	Calculate win rate and average R per trade

After 50 harami trades with consistent logging, patterns emerge quickly — for example, haramis at daily Fibonacci levels may show 65% win rate while mid-range haramis may show 42%. PipJournal’s tag filtering lets you slice harami results by session, pair, structure type, and candle 2 body ratio, so you can build a rules-based refinement over time that reflects your actual edge rather than a theoretical one. The engulfing candle and piercing line are related reversal signals worth tracking alongside harami data for a complete picture of your candlestick trading performance.