Bullish Harami: The Quiet Reversal Pattern That Demands Follow-Through

The Bullish Harami is a two-candle pattern that forms after a downtrend. The first candle is a long bearish candle. The second candle is a smaller candle whose body closes inside the body of the first candle. The name comes from the Japanese word for pregnant – the small candle nestled inside the larger one. This pattern signals that selling pressure may be exhausting. It does not guarantee a reversal. It only indicates that bears are losing momentum.

Why This Pattern Matters Right Now

In the current market environment, many stocks have been grinding lower on decreasing volume. A Bullish Harami appearing in such a downtrend offers a concrete entry trigger for traders looking for a bounce. The small second candle shows indecision. When it appears after a clear bearish move, it suggests that sellers are no longer driving price with conviction. The pattern works best when the preceding downtrend spans at least five to ten candles. The larger the first candle's body and the smaller the second candle's body, the more reliable the signal.

Volume also matters. Declining volume on the second candle supports the idea of exhaustion. Without that volume decline, the pattern could simply be a pause before another leg down. Traders must treat the harami as a conditional signal, not a standalone buy order.

The Confirmation Step That Separates Trades From Gambles

A Bullish Harami requires a third-day confirmation. Traders wait for a third candle to close above the high of the second candle. That close triggers the entry. The stop loss is placed below the low of the first candle. The profit target can be a prior resistance level or a measured move equal to the height of the first candle.