This post was originally published on October 10th, 2024, and updated on May 30th, 2025.
The Bearish Harami is a two-candle reversal pattern that often signals a potential shift from an uptrend to a downtrend. It appears on candlestick charts and is widely used in technical analysis to anticipate possible market reversals.
The Bearish Harami works as a signal of potential reversal in an existing uptrend. Understanding its structure and behavior within the broader market context is essential to interpreting it effectively.
This structure suggests that bullish dominance may falter, and sellers could gain control.
The Bearish Harami typically forms after a sustained uptrend. Its effectiveness increases when it appears after overbought conditions or near key resistance levels. Contextual indicators such as RSI (Relative Strength Index) or MACD (Moving Average Convergence Divergence) can further confirm the potential reversal.
Lower trading volume on the second candle is typical. This aligns with indecision and reduced participation by bullish traders. However, increased volume on the third candle, if it confirms the reversal, supports the pattern’s credibility.
To correctly identify and act on a Bearish Harami, traders look for specific visual and contextual clues.
The Bearish Harami consists of two distinctly different candles. The first is a large bullish candle that demonstrates strong upward pressure. It reflects widespread optimism and buyer control. The second is a small bearish candle that opens lower and closes lower than it opened but remains within the body of the first candle. This second candle shows a loss of momentum and growing hesitation, often marking a turning point in sentiment.
This pattern is only significant when it forms during a sustained uptrend. Its predictive value diminishes if it appears sideways or in a consolidating market. In trending environments, the Bearish Harami may emerge after an extended bullish run or at a historically strong resistance level, reinforcing its reliability as a signal of potential trend reversal.
Because the Bearish Harami signals a weakening of bullish momentum rather than immediate bearish strength, confirmation is often necessary before taking action. This confirmation typically comes in the form of a third candle, which is a strong bearish candlestick that closes below the low of the Harami pattern. Without this follow-up, the Harami can represent temporary hesitation rather than a complete reversal.
The size of the candlesticks plays an essential role in pattern recognition. A significantly large first candle demonstrates dominance by buyers, while a noticeably smaller second candle suggests a drop in confidence or indecision. Wicks on either side of the second candle may indicate attempts by both buyers and sellers to influence direction, adding to the theme of uncertainty. The contrast in body size between the two candles visually highlights the market shift.
The Bearish Harami provides several opportunities for traders when used with complementary tools and indicators. Below are structured strategies that incorporate the pattern.
This strategy involves waiting for a third candle to confirm the reversal before entering a trade.
Relative Strength Index (RSI) can help filter stronger Bearish Harami setups.
Combining pattern recognition with resistance levels adds confluence to your trade.
Real-world examples of Bearish Harami can illustrate how the pattern works in different market conditions.
On December 28, 2021, Apple Inc. (AAPL) exhibited a Bearish Harami pattern on its daily chart. The stock was in an uptrend, and the first candle was a long bullish marubozu, indicating strong buying momentum. The following day, a smaller bearish candle formed within the body of the previous bullish candle, signaling potential buyer exhaustion. This pattern suggested a possible reversal in the prevailing uptrend.
On October 5, 2022, the S&P 500 Index displayed a Bearish Harami pattern during a rally attempt. A large bullish candle was followed by a smaller bearish candle that was completely engulfed within the body of the previous candle. This formation indicated a potential shift in market sentiment from bullish to bearish, suggesting a possible reversal in the ongoing uptrend.
While both patterns fall under the Harami family, they serve opposite functions in market trend analysis. The Bearish Harami forecasts a possible downward reversal, while the Bullish Harami suggests a potential upward move. The table below contrasts the two:
Both Bearish Harami and Bearish Engulfing patterns signal potential reversals, but they differ in structure and strength. The table highlights their differences:
The Bearish Harami provides insight into shifting trader sentiment and momentum in the market. Its psychological interpretation adds depth to its application in trading decisions.
The initial bullish candle indicates strong upward enthusiasm, with buyers confident in pushing the price higher. However, when the second candle opens lower and closes within the previous day’s body, it signals that optimism has started to fade. Traders question whether the rally can continue, leading to hesitation in initiating new long positions.
The formation of the small bearish candle suggests that bullish energy is weakening. Fewer buyers are stepping in at higher prices, and the momentum begins to stall. At this point, some traders may lock in profits, reducing demand and allowing sellers to influence price action. This pause often marks the tipping point in buyer dominance.
Recognizing the Bearish Harami, informed traders may prepare for a reversal by adjusting their positions. Some begin exiting long trades to avoid losses, while others initiate short trades expecting a price decline. This shift in trading behavior adds to selling pressure and reinforces the pattern’s signal. The psychological tension between waning bullish enthusiasm and rising bearish sentiment drives the price action that follows the pattern.
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