UK Accounting Glossary
The bearish harami is a candlestick charting pattern — it is a bearish reversal pattern. A typical bearish harami is characterized by one long candle and a much shorter candle which is completely engulfed by the large candle. Some traders prefer that the large candle engulfs the shadows as well as the body of the short candle, but other traders do not view this as necessary. The candles in a bearish harami pattern can be of any colour combination (e.g. black/black, black/white, white/black, white/white). However, some market technicians believe that the reliability of a bearish harami signal is increased when the first candle is black (i.e. black/black, black/white) or when the size of the second candle is minimal. When a bearish harami occurs after an uptrend, it suggests that the upward momentum for a security is weakening. Often, however, the bearish harami is regarded as a weak signal. Indeed, the bearish harami can mimic small pullbacks commonly seen during an uptrend. Traders will look for confirmation on the days following the bearish harami to validate the pattern and determine whether the trend is down or sideways.
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This glossary post was last updated: 4th February 2020.