Bullish Harami Candlestick Pattern: How to Confirm & Trade It Successfully

Momentum shifts are what traders look for when spotting potential reversals. The Bullish Harami candlestick pattern is one such signal, appearing when sellers lose control and buyers start taking over. 

This two-candle pattern suggests a possible trend reversal, giving traders a chance to catch a new move before it gains momentum.

Understanding how this pattern works, when to use it, and how to confirm its signal is essential for anyone who wants to trade with confidence. This guide breaks down everything you need to know about the Bullish Harami pattern, including how to trade it effectively.

The Bullish Harami is a two-candle reversal pattern that signals a potential shift from a downtrend to an uptrend. 

It appears when a large bearish candle is immediately followed by a smaller bullish candle that is fully contained within the body of the first candle.

This pattern suggests that selling pressure is weakening, and buyers are stepping in to defend a certain price level. However, traders typically wait for further confirmation before taking a long position.

Key Characteristics:

• Forms after a downtrend, signaling possible exhaustion of selling pressure.
• The first candle is bearish (red/black) and significantly larger than the second candle.
• The second candle is bullish (green/white) and fully contained within the body of the first.
• Indicates a potential trend reversal, but confirmation is needed

The Bullish Harami candlestick pattern is illustrated below.

• Forms after a downtrend, signaling a possible trend reversal.
• The first candle is large and bearish, showing previous selling pressure.
• The second candle is small and bullish, staying within the first candle’s range.
• Indicates buyers stepping in, but confirmation is needed before entering a trading system.

The Bullish Harami reflects a shift in market sentiment. The large bearish candle shows that sellers were in control, driving prices lower. However, the smaller bullish candle signals that selling pressure is weakening as buyers manage to keep prices from falling further.

This pattern often appears when bears lose confidence, and early buyers begin stepping in. If the next few candles confirm the reversal with higher closes, the market sentiment will turn bullish.

Market Conditions

The Bullish Harami is most effective when it appears after a clear downtrend, signaling that selling momentum may be fading. It is more significant when it forms at a key support level, suggesting that buyers are defending that price zone. This pattern may indicate temporary consolidation in sideways markets rather than a full trend reversal.

Volatility Considerations

In high-volatility markets, the Bullish Harami may produce false signals, as strong price swings can cause quick breakouts in both directions. This pattern can carry more weight in low-volatility environments, as price action tends to be more controlled and less erratic.

• Stop-loss placement: Below the low of the Bullish Harami pattern to protect against false breakouts.
• Entry strategy: Traders often enter after bullish confirmation, such as a breakout above the second candle’s high.
• Profit target: Use resistance levels or a risk-reward ratio (e.g., 2:1) to set an appropriate exit.

• No follow-through buying: If the next candles do not confirm bullish momentum, the pattern may fail.
• Break below the pattern’s low: If the price drops below the lowest point of the Bullish Harami, the bullish signal is invalidated.
• Strong downtrend continuation: If overall market momentum remains bearish, buyers may not be able to push the price higher.

To trade the Bullish Harami in a systematic approach:

1. Identify a strong downtrend before the pattern forms.
2. Detect a Bullish Harami with a small bullish candle contained within the previous bearish candle.
3. Require confirmation: Enter long only if the next candle confirms bullish movement.
4. Set stop-loss below the Bullish Harami’s low.
5. Backtest before using real capital.

Traders should always test historical data before using this pattern in live trading.

Below is a simple AFL script to detect the Bullish Harami in Amibroker:

// Bullish Harami AFL Code for Amibroker

_SECTION_BEGIN(“Bullish Harami”);

FirstBearish = Ref(Close, -1) < Ref(Open, -1);

SecondBullish = Close > Open;

SmallCandle = (High – Low) < (Ref(High, -1) – Ref(Low, -1)) * 0.5;

Contained = Open > Ref(Close, -1) AND Close < Ref(Open, -1);

BullishHarami = FirstBearish AND SecondBullish AND SmallCandle AND Contained;

PlotShapes(IIf(BullishHarami, shapeStar, shapeNone), colorGreen, 0, Low);

_SECTION_END();

This script finds Bullish Harami patterns and marks them with a green star.

The Bullish Harami candlestick is a potential bullish reversal pattern that appears after a downtrend. 

It signals sellers are losing momentum, and buyers may be preparing to take control. However, confirmation from the next few candles is crucial before trading decisions.

Links to articles about other Candlestick Patterns

1. Doji
2. Hammer
3. Inverted Hammer
4. Bullish Engulfing
5. Bearish Engulfing
6. Morning Star
7. Evening Star
8. Shooting Star
9. Hanging Man
10. Piercing Pattern
11. Dark Cloud Cover
12. Three White Soldiers
13. Three Black Crows
14. Dragonfly Doji
15. Gravestone Doji
16. Spinning Top
17. Marubozu
18. Tweezer Top
19. Tweezer Bottom
20. Bullish Harami 
21. Bearish Harami
22. Rising Three Methods
23. Falling Three Methods
24. Bullish Abandoned Baby 
25. Bearish Abandoned Baby 
26. Bullish Kicker 
27. Bearish Kicker
28. Three Inside Up
29. Three Inside Down
30. Upside Gap Two Crows
31. Mat Hold
32. Upside Tasuki Gap
33. Downside Tasuki Gap