What it means
A harami ('pregnant' in Japanese) forms when a large directional candle is followed by a small candle whose ENTIRE range fits inside the prior candle's BODY. Bullish harami: large red candle, then small green inside it (potential bottom). Bearish harami: large green candle, then small red inside (potential top). Less aggressive than engulfing — signals pause rather than active reversal.
Why it matters
Harami captures momentum loss — the strong directional session is followed by a contained session showing the prior side can't push further. Less powerful than engulfing (~52-58% reliability per Bulkowski) but more common, providing more setups per year.
How to use it
Require strong prior trend (large first candle in trend direction). Confirmation = next candle closes beyond the small candle's body in the reversal direction. Stop beyond the harami's extreme. Less reliable alone than engulfing — best combined with structural levels.
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