Harami Candlestick Pattern — Meaning, Psychology & How to Trade It

A small candle whose body sits entirely inside the prior large candle's body.

In plain words

A big parent candle holding a small baby candle — momentum suddenly shrinks.

What the classic books say

The Harami is a 2-candle reversal pattern described in the standard candlestick literature (Steve Nison's work brought these Japanese techniques west). Reference reliability is rated Medium with illustrative behaviour of ~53-58% when confirmed. Better as an early warning than a standalone trigger.

Level by level

Beginner

After a big strong candle, the next one is tiny. The strong move is losing energy.

Intermediate

A sharp contraction in range signals the prior trend's momentum is fading; a potential turn.

Advanced

An inside-bar reversal; direction depends on prior trend. Confirmation is important as it is a weaker signal alone.

Trade plan (educational template)

• Confirmation: Break in the reversal direction beyond the mother candle.
• Invalidation: Continuation beyond the mother candle in the trend direction.
• Size the trade with the Position-Size and Risk-Reward calculators.

Common beginner mistakes

• Acting before the breakout
• Ignoring trend context

Practise it now

• ▶ Build the Harami live in the Candlestick Playground
• 📖 Full lesson with quiz in the Learning Hub
• 🎯 Test yourself in the Daily Challenge

_Educational content only — not financial advice. Historical behaviour never guarantees future results._