Harami Cross Candlestick: What It Is and How It Works

What is a Harami Cross?

The Harami Cross is a two-day reversal pattern. It occurs when a cross (Doji) candle, following a large candle, is completely “engulfed” or contained within the body of the preceding candle.

The name “Harami” comes from a Japanese word meaning “pregnancy”. 

The first candle, with a long body, resembles a “mother,” while the short second candle resembles a “child”; hence the name.

Key Characteristics

• Mother Candlestick: The first candlestick has a body long enough to encompass the second one. It indicates a strong trend, either upward or downward.

• Doji: The second candlestick is a doji, meaning its opening and closing prices are nearly identical.

• Enclosure: The entire body of the doji must fit within the vertical range of the first candlestick's body.

Some traders tolerate the doji's wicks extending beyond this range, but the strongest signal is said to occur when the entire doji is contained.

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Why the Harami Cross Is Viewed as a Strong Reversal Signal

The harami cross candlestick is considered a much stronger reversal pattern than a standard Harami because the Doji captures a dramatic psychological shift in the market.

The first candle represents the final surge of momentum in a trend that has reached its limit.

When a Doji appears immediately afterward, it signals that the strong price movement seen just prior has come to an abrupt stop.

At this moment, buyers and sellers are in perfect equilibrium, with neither able to push the price further.

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A Powerful Warning for Trend Followers

For traders who position in the ongoing trend, the harami cross pattern serves as a clear indication that momentum has faded and a reversal may be approaching.

When the market fails to sustain price action beyond the previous candle’s real body, it suggests that the buying or selling pressure supporting the trend has disappeared.

This loss of fresh participation is a crucial signal that the underlying trend is nearing exhaustion.

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Higher Reliability Compared to the Standard Harami

The transition from a strong momentum candle to a complete standstill (the Doji) is a rare and highly meaningful formation, which increases the pattern’s statistical reliability.

Unlike the traditional harami candlestick pattern, where the second candle still has a small body and thus retains a slight directional bias, the harami cross shows absolute indecision.

This makes the bullish harami cross or bearish harami cross far more compelling as a reversal setup.

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A Clear Snapshot of Momentum Shift

The harami cross effectively captures the moment when the previously dominant side of the market is suddenly met with equal force from the opposing side.

This balance often precedes a sharp move in the opposite direction during the following trading periods, making the harami cross candlestick pattern one of the most valuable signals for identifying potential trend reversals.

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How the Harami Cross Candlestick Pattern Works

The harami cross candlestick typically appears at key turning points in a trend, and its meaning changes depending on where it forms:

• Near the top of an uptrend → a potential reversal to the downside

• Near the bottom of a downtrend → a possible shift upward

The first large candle shows clear directional momentum, but when a Doji forms immediately afterward, it visually confirms that the previous momentum has sharply weakened.

The most crucial factor is the strength of the trend leading up to the harami cross.

The more substantial and more extended the trend, the more significant the sudden loss of momentum becomes, raising the credibility of a potential reversal.

What Is a Bullish Harami Cross?

A bullish harami cross forms near a downtrend's end when a Doji fits entirely within the real body of the previous bearish candle.

This formation signals that selling pressure is weakening, while buying momentum is beginning to push back.

It is an early sign that the market may be preparing for a potential reversal.

From a market psychology standpoint;

• Sellers are no longer able to drive prices lower.

• Buyers are positioning themselves for a counterattack.

When the price breaks above the Doji's high, this confirmation candle often triggers a bullish reversal, indicating that sentiment has shifted from bearish to bullish.

In many cases, this move marks the beginning of a new uptrend, making the bullish harami cross candlestick pattern a valuable signal for traders seeking early reversal opportunities.

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What Is a Bearish Harami Cross?

A bearish harami cross appears at the top of an uptrend, signaling waning upward momentum.

It forms when a strong bullish candle is followed by a Doji that is fully contained within the previous candle’s real body.

This structure reveals that buyers, who had dominated the trend, are beginning to lose strength and can no longer push prices higher.​

From a psychological standpoint;

• Buyers are showing clear signs of exhaustion.

• Sellers are gradually stepping in and preparing to regain control.

A bearish reversal becomes more likely when the price breaks below the Doji's low, creating a confirmation candle.

Once this breakdown occurs, the bearish harami cross candlestick pattern often signals a downward shift, especially when it appears near resistance or after an extended rally.

This pattern frequently signals the early phase of a downtrend, making it a valuable warning for traders who want to exit long positions or anticipate a bearish move.

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Trading Strategies Using the Harami Cross Candlestick

Consider using the harami cross candlestick pattern as a strong trading signal, paired with confirmation and risk management, in your next trade.

Although the pattern highlights a sudden loss of momentum and a possible trend reversal, entering a position immediately can be risky. Traders should wait for a confirmation candle before taking action.

• In a bullish scenario, confirmation occurs when the price breaks above the Doji’s high.

• In a bearish scenario, confirmation appears when the price breaks below the Doji’s low.

This confirmation step helps eliminate false or deceptive signals and significantly improves trade accuracy.

Understanding the appropriate entry points for both bullish and bearish harami cross patterns is essential for building a reliable reversal-based trading strategy.

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Why You Should Wait for a Confirmation Candle

The doji alone signals indecision, not a completed reversal.

A strong move in line with the expected trend change is necessary to validate the pattern.

Waiting for this confirmation reduces the risk of entering during a temporary price pause, which is common in volatile markets.

• For bullish setups＋confirmation = breakout above the Doji’s high

• For bearish setups＋confirmation = breakdown below the Doji’s low

This simple rule dramatically increases the reliability of the harami cross candlestick as a reversal signal.

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Entry Strategy for a Bullish Harami Cross

This strategy applies to a bullish harami cross, which typically forms near the end of a downtrend.

After the harami cross candlestick pattern appears, a buy entry is triggered when the third candle breaks above the high of the first large bearish candle.

More conservative traders may wait until the candle closes clearly above the Doji’s high to confirm that bullish momentum has firmly returned.

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Entry Strategy for a Bearish Harami Cross

This strategy applies to a bearish harami cross, which commonly forms near the top of an uptrend.

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After the harami cross pattern is completed, a sell entry is triggered when the third candle breaks below the low of the first large bullish candle.

Traders should confirm that the price has decisively broken below the Doji’s low and that bearish momentum has begun before entering the position.

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Stop-Loss Placement

When trading the harami cross candlestick pattern, setting an appropriate stop-loss is essential for managing risk.

In highly volatile markets, reversal signals can easily fail or develop into false breakouts, so a protective stop-loss helps minimize unnecessary losses.

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Bullish Setup

Place the stop-loss slightly below the Doji's low.

If the low of the first large bearish candle is even lower, set the stop-loss beneath that level for additional safety.

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Bearish Setup

Place the stop-loss above the high of the Doji.

Similarly, if the high of the first large bullish candle is higher, use that level as the stop-loss to account for potential upward spikes.

Take-Profit Strategy

Profit-taking should be based on historically significant price levels.

For both bullish and bearish harami cross patterns, the following methods are effective:

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1.Target the nearest support/resistance levels:

Use previous support or resistance zones along the expected reversal path as your first take-profit target.

2. Use retracement levels from the preceding trend (e.g., 38.2% or 50% Fibonacci):

These levels often act as natural reaction zones after a reversal.

3. Employ a trailing stop to capture extended moves:

This allows you to stay in the trade if a new trend develops while protecting unrealized gains.

4. Scale out of positions:

Partially close positions to lock in profit while keeping a portion open to capture additional upside or downside movement.

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By applying this structured approach, traders can manage risk effectively while maximizing the profit potential of a reversal identified by the harami cross candlestick pattern.

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Conclusion

The harami cross candlestick is a powerful reversal signal, signaling a sudden drop in momentum and a potential trend shift.

The appearance of a cross alone can be a false signal, so use it with confidence by waiting for subsequent confirmation and applying a stop loss.

Furthermore, when used in conjunction with support/resistance and key indicators, it can be a useful pattern to capitalize on market reversals with even greater precision.