HARAMI
11 May 2016 By PDSNET
Also called an inside day, the harami is a top or bottom candlestick reversal pattern which comprises of a small candle situated within the body of it's preceding candle. Harami means pregnant in Japanese. Therefore, this formation is likened to a pregnant mother and her baby - the harami's body must be contained within it's preceding candle's (the mother candle's) body. The body of the harami, or the baby, must be small, and the body of the mother must be average size. The shadows of the baby should not be extended further than the high and low of the mother candle. The theory behind is this candlestick formation is that the opposing market pressure has stopped the dominant market pressure in their tracks and is driving the price in the opposite direction. It is important to always look for a continuation pattern when you see a harami as it can be misleading.
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