Bearish Harami Pattern: Definition, Example, and How It Works

What is a Bearish Harami Pattern?

The Bearish Harami is a two-candle pattern that appears on a price chart and signals potential weakness in an ongoing bull market. The word Harami comes from Japanese and means “pregnant,” which reflects the structure of the candlestick pattern: a smaller candle “contained” within the body of a larger one.

This formation occurs when a large bullish candle (typically with a long real body) is immediately followed by a smaller bearish candle whose body is entirely within the range of the previous candle. The second candle often reflects indecision or a loss of momentum from buyers.

In essence, the Bearish Harami suggests that the strong upward movement may be losing steam, and that sellers could be starting to gain control. However, it's important to note that the pattern alone does not confirm a reversal, it serves as a cautionary signal that requires further confirmation from price action or technical indicators.

Characteristics of the Bearish Harami Pattern

To correctly identify and interpret a Bearish Harami, it's essential to understand its key features. While the pattern appears simple, each component plays a role in signaling potential market hesitation or reversal.

1. Two-Candle Structure

• First Candle: A long bullish (green or white) candlestick that reflects strong buying pressure. This candle usually follows an established uptrend.

• Second Candle: A small bearish (red or black) candlestick that opens and closes within the real body of the first candle. This candle represents reduced buying interest or early signs of selling pressure.

2. Complete Containment

• The body of the second candle must be entirely within the range of the first candle’s real body. This containment visually suggests that the previous upward momentum has stalled.

3. Market Psychology

• The pattern reflects a shift in sentiment. The large bullish candle indicates confidence from buyers, but the smaller second candle, especially if bearish, reveals hesitation or caution.

4. Occurs After an Uptrend

• The Bearish Harami is only relevant as a reversal signal when it appears after a sustained upward movement. It holds little value in sideways or already bearish markets.

What Does the Bearish Harami Indicate?

The Bearish Harami candlestick signals a possible reversal in an uptrend. It reflects a shift in market sentiment, where strong buying pressure, shown by the first candle, is followed by hesitation or weakness in the second.

This pattern suggests that buyers may be losing control and that sellers could begin to take over. While it doesn't confirm a downtrend on its own, it serves as an early warning, especially when supported by other technical indicators or resistance levels.

Bearish Harami vs. Other Candlestick Patterns

Understanding how the Bearish Harami compares to other reversal patterns can help traders make more informed decisions.

Bearish Harami vs. Bullish Harami

While both patterns share a similar structure, they appear in opposite market contexts and signal different outcomes:

• The Bearish Harami candle forms after an uptrend and suggests a potential shift to bearish momentum.

• The Bullish Harami occurs after a downtrend and points to a possible bullish reversal.

• The second candle in both patterns is smaller and fits within the range of the first, but the color and trend direction distinguish them.

Bearish Harami vs. Bearish Engulfing

These two are both bearish reversal patterns, but they differ in formation and strength:

• In a Bearish Harami, the second candle is smaller and fits entirely within the body of the first candle, indicating hesitation.

• In a Bearish Engulfing pattern, the second candle is larger and completely engulfs the first candle’s body, signaling a stronger shift in sentiment.

• The Bearish Engulfing pattern tends to carry more weight as a reversal signal due to its aggressive price action.

Where and When Does the Bearish Harami Work Best?

The Bearish Harami candlestick is most effective when used in the right market context and timeframe. While it can appear in any financial market, its reliability depends on surrounding conditions.

Best Market Conditions

• Trending Markets: The pattern is most meaningful when it appears after a clear and sustained uptrend.

• At Resistance Levels: It gains strength when it forms near key resistance zones or psychological price levels.

• Overbought Situations: When confirmed by indicators like the RSI showing overbought conditions, the signal becomes more credible.

Suitable Markets

• Works well in various markets, including:

  • Stocks

  • Forex

  • Commodities

  • Indices

  • Cryptocurrencies

Recommended Timeframes

• Most reliable on higher timeframes such as:

  • Daily

  • 4-hour

  • Weekly

• On shorter timeframes (like 5-minute or 15-minute charts), the pattern may produce more false signals due to market noise.

How to Trade the Bearish Harami Pattern

While the Bearish Harami candle alone is not a signal to enter a trade, it can be a valuable part of a broader trading strategy. Traders typically wait for confirmation before acting on the pattern.

Wait for Confirmation

• A bearish candle following the Harami pattern confirms seller strength.

• Additional confirmation can come from indicators such as:

  • RSI showing overbought conditions

  • MACD crossing downward

  • Declining volume on bullish moves

Entry Point

• Conservative traders wait for the price to break below the low of the second (smaller) candle before entering a short position.
• Aggressive traders may enter at the open of the next candle if confirmation appears strong.

Stop-Loss Placement

• A common stop-loss level is just above the high of the first candle.
• Traders may also use nearby resistance levels for added protection.

Take-Profit Targets

• Set profit targets at previous support levels, Fibonacci retracement zones, or using a risk-reward ratio of 1:2 or higher.
• Some traders trail their stop to lock in profits as the trade moves in their favor.

Risk Management

• Avoid trading the pattern in isolation.
• Always use proper position sizing and follow a clearly defined risk management plan.

Limitations of the Bearish Harami

Like all candlestick patterns, the Bearish Harami candlestick pattern has its limitations. Relying on it alone without considering market context or confirmation can lead to inaccurate signals.

• Not a Standalone Signal: The Bearish Harami should not be used in isolation. It may result in premature or false entries without confirmation from price action or indicators.

• Less Effective in Ranging Markets: The pattern tends to lose significance in sideways or low-volatility markets, where trend direction is unclear.

• Susceptible to False Signals: Especially on lower timeframes, market noise can lead to many false Harami patterns that do not lead to a reversal.

• Depends on Context: Its reliability improves when combined with other elements like resistance zones, trendlines, volume analysis, or momentum indicators.

• Visual Interpretation Can Vary: Traders may interpret candle sizes and body containment differently, especially if the candles are close in size. This subjectivity can affect how the pattern is identified and used.

What Is the Success Rate of Bearish Harami?

The success rate of the Bearish Harami pattern varies depending on market conditions, timeframe, and confirmation methods. On average, it shows a reversal accuracy of 55% to 60% when used with additional indicators and appears after a clear uptrend. However, without confirmation, its reliability drops significantly.

Tips for Trading the Bearish Harami

Here are some practical tips for using the Bearish Harami pattern effectively:

• Always wait for confirmation (e.g., a bearish candle after the pattern).

• Use higher timeframes (daily or 4-hour) for more reliable signals.

• Combine with indicators like RSI or MACD to strengthen the setup.

• Check for resistance levels or overbought zones before entering.

• Place stop-loss above the pattern high to manage risk.

• Avoid trading in sideways markets where patterns are less reliable.

• Backtest the pattern in your chosen market before using it live.

Conclusion

The Bearish Harami is a candlestick pattern that can signal a potential shift in market sentiment, particularly after an upward trend. While its structure is simple, its interpretation depends heavily on context, confirmation, and supporting technical signals.

Used thoughtfully, the Bearish Harami can help traders recognize moments of hesitation in the market and prepare for possible trend reversals. Like all patterns, it is most effective when integrated into a broader trading strategy that includes risk management and market analysis.