In this article, we’re going to learn about Bullish Harami and find out what it is. Traders have been using candlestick charts since the 18th century. Candlestick charts were first invented in Japan’s rice market by Munehisa Homma, a Japanese rice trader. Since then candlestick charts have been a great tool for traders and market analysts to gain information about the market.
Whether you are an investor or trader you would find candlestick charts very useful. There are many ways in which you could use candlestick charts to extract data from the market. One popular way is to find candlestick patterns or candlestick chart indicators. Bullish Harami is another candlestick chart indicator which signals specific messages that could be helpful for you.
Continue reading this article to find out: what is a bullish harami, how can you find this pattern on a candlestick chart, and how should you trade it, or in other words what it tells you as a trader.
What is Bullish Harami?
Bullish harami is a candlestick chart pattern that signals the end of a bearish trend. It could signal the end of a bearish trend in a specific asset or the whole market. If you are an investor looking forward to buying a cryptocurrency and investing in it or you’re a trader waiting for a sign that says “a bullish trend may begin” so you could enter your long position, the Bullish Harami candlestick chart pattern could be that sign for you.
Before we start with the bullish harami candlestick chart indicator, we must first introduce the candlestick charts to you for those of you who may not be familiar with them. If you already know what a candlestick chart is, you may want to skip to the next section and start learning about the bullish harami candlestick pattern.
What is a candlestick chart?
Candlestick charts are a type of chart which traders use to track the price of an asset. Traders call it candlestick charts because they show rectangular red and green things called candles to show the performance of the said asset. Each candle represents a period of time, for example, in Bitcoin’s weekly candlestick chart each candle shows the changes in Bitcoin’s (BTC) price during that week.
Each candle gives us 4 important data: open, close, highest and lowest prices.
By being able to extract these data, fully understand them and also know how to read those data and what they’re trying to say to us, you can become a profitable trader. Now that we have covered the basics of candlestick charts, we can continue learning about the bullish harami candlestick pattern.
What is the Bullish Harami pattern?
Bullish harami is a candlestick chart indicator. Which signals the investors and traders that the bearish trend may be coming to an end.
How could that be useful to you?
It signals that the bearish trend is ending, so a bullish market may be starting, so if you can get ready to invest and buy more of the coin you were looking forward to buying or even get ready to open your long position on that asset.
Now, in this section we want to look at how a bullish harami candlestick pattern takes place, what a bullish harami candlestick pattern looks like, and what does the word harami even mean? The word harami is an old Japanese word that means “pregnant”. The reason traders named this pattern in such a way is because of the pattern’s odd shape that to some people with a good imagination, looks like a pregnant lady.
On a daily candlestick chart where a candle represents a day, the bullish harami needs 2 to 3 days to fully emerge, as the bullish harami is a two to three candles long candlestick pattern.
The first, or the first candles in a bullish harami candlestick pattern are bearish red candles. The first one or two candles (depending on the length of the pattern) of bullish harami should be red downward candles signalling traders that “the bearish trend may not end soon, in fact, it’s going to push the price lower and the price will drop”. The third candle in this candlestick pattern should be a small green doji candle fully contained by the previous candle’s body.
The first candlesticks in the bullish harami should be candles with long bodies which are facing downwards. Meaning both of the first candles should be red bearish candles, showing that the bearish trend is going to continue. The last candle is a green doji candle which is slightly moving upwards.
The last bullish harami candle is a doji which slightly moves the price higher, meaning it’s a green doji. This candle should fit perfectly in the previous candle’s body (a candle body is the coloured rectangular part which is the difference between the open and close prices). The doji candle indicates that the bearish trend could very possibly have come to an end. And that it’s time for the bullish trend to begin.
What is the Bullish Harami Cross?
The bullish harami cross is another name for the bullish harami pattern. It’s consistent with a large downward candle usually coloured red or black, followed by a doji candle. The previous candle should fully contain the doji candle. This means the doji shouldn’t be contained by the previous candle’s shadow or wick.
The first candle in the Bullish harami cross indicates that the trend is being controlled by bears (the sellers). The doji candle, on the other hand, indicates that maybe the plan is changed. That sellers aren’t willing to sell anymore, which is confirmed by the following candles.
Bullish Harami candlestick confirmation comes to a few candlesticks after the bullish harami’s doji candle. After the doji closes, you should be waiting to observe bullish green candles starting to rise in price.
Your first confirmation comes after the doji candle. When the bullish candles have taken the price higher than the first harami candle (the big red candle). In other words, if you take the first candle’s open price as a resistance level, your first confirmation comes when that resistance level is broken.
How do you trade bullish harami?
The bullish harami candlestick pattern indicates that the current bearish trend may have come to an end. To trade the bullish harami pattern you must wait for the confirmation. Then buy the asset you want to or open your long position.
Is harami bearish or bullish?
Harami or Harami cross is the name of a reversal candlestick pattern consistent with 2 to 3 candles. This pattern can be both bullish and bearish depending on where it appears. If in a bullish trend you see a harami pattern this means a reversal in trend.