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Chapter 9, Part V. Double Deuce – dual candlestick patterns. Page 6

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    HARAMI

    The Harami pattern in opposite to Engulfing has the big first candle and small second candle. Like on the picture:

    [​IMG]

    The small candle also can be a Doji – in this case pattern calls “Harami cross”

    Appearing of a Harami tells us that the previous tendency of the market becomes weaker. Partially, this pattern recalls “Indecision” condition, so that the market can either continue the previous tendency or reverse, at least temporary. Harami can appear as on tops as on bottoms.

    Recognition and properties of Harami:

    - If both candles of the Harami are white (so called White-white Harami), then the Harami has a stronger bullish character and its appearance on a bottom increases the probability of reversal. A white-black Harami is more bullish than a black-white or a black-black. The same is true for black-black Harami on top – it’s more bearish than black-white, and even more bearish than white-black and white-white;

    - Theoretically Harami should have the second candle in the middle of the first one. But also it could happen that the small candle closer to upper (So called “high-price Harami”) or lower (“low price Harami”) border of the first long candle. It makes a lot of sense. If, for example, if a high-price Harami appears on bottom – this is a more bullish sign, than a normal or low-price Harami. It will be even more bullish, if this will be white-white High price Harami. The same is true for black-black low-price Harami on tops;

    - If the total range (from low till high) of the second candle stands inside of the body of the first one, the Harami is more reliable and has more probability to reverse the previous tendency;

    - The smaller the shadows and body of the second candle – the more reliable Harami pattern;

    - The Harami Cross pattern has greater probability to stop a previous tendency (at least temporary), than ordinary Harami;

    - There is no such term as “failed Harami”, because Harami is not a purely reversal pattern. If market will close above the high of Harami and previous price action was up, then we should expect continuation of up move; the same is true for market close below the low of Harami after previous down move.

    Here is an example of Harami cross, by the way:

    [​IMG]

    Commander in Pips: Ok, and the last pattern for today – Tweezer Tops and Bottoms.
     
    Hamza Samiullah and fran alvarez like this.
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