Bearish Harami Candlestick Pattern – What Is And How To Trade

Everything that you need to know about the Bearish Harami candlestick pattern is here.

Today you’ll learn:

What Is The Bearish Harami Candlestick Pattern
How To Identify The Bearish Harami Candlestick Pattern
Variants Of The Bearish Harami Candlestick Pattern
How To Trade The Bearish Harami Candlestick Pattern
Strategies To Trade The Bearish Harami Candlestick Pattern
What Is The Success Rate Of The Bearish Harami?
This is what you learned today
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What Is The Bearish Harami Candlestick Pattern

The Bearish Harami is a Japanese candlestick pattern.

It’s a bearish reversal pattern.

Usually, it appears after a price move to the upside and shows rejection from higher prices.

The pattern is bearish because we expect to have a bear move after the Bearish Harami appears at the right location.

It’s a reversal pattern because before the Bearish Harami appears we want to see the price going up, thus it’s also a frequent signal of the end of a trend.

The Bearish Harami pattern is also a mirrored version of the Bullish Harami candlestick pattern.

How To Identify The Bearish Harami Candlestick Pattern

The Bearish Harami candlestick pattern is formed by two candles.

Here’s how to identify the Bearish Harami candlestick pattern:

The first candle must be bullish and have a big body
The second candle must be small and bearish
The second candle is inside the body of the first candle

It looks like this on your charts:

Variants of the Bearish Harami Candlestick Pattern

The Bearish Harami candlestick pattern may appear a little different on your charts:

The second candle may not have a gap with the previous candle
The second candle may have a bigger wick at the top

Here’s what it may look like on your charts:

How To Trade The Bearish Harami Candlestick Pattern

To trade the Bearish Harami candlestick pattern it’s not enough to simply find a series of candles with the same shape on your charts.

Let me explain.

What makes a pattern valid is not just the shape, but also the location where it appears.

This means that the same shape appearing at different locations may have different meanings.

When trading the Bearish Harami, we want to see the price first going up, making a bullish move.

A Bearish Harami appearing after this bullish move is a sign of a possible reversal to the downside.

It looks like this:

Now you’re thinking.

“When do I open my trade?”

It’s simple, the Bearish Harami pattern is traded when the low of the last candle is broken.

That’s your conservative trigger to short.

It looks like this:

Now, you also want to protect yourself because when trading things don’t always move as we expect.

And for that, we use a stop loss.

There are several different types of stop losses.

The most common is to use the other side of the pattern to set it.

Like this:

But wait, don’t jump into trading the Bearish Harami right yet.

There are a few more things to know.

Ideally, to increase the accuracy, we want to trade the Bearish Harami candlestick pattern by combining it with other types of technical analysis or indicators.

Here are a few strategies to trade the Bearish Harami pattern.

Strategies To Trade The Bearish Harami Candlestick Pattern

Strategy 1: Pullbacks On Naked Charts

As a bearish reversal pattern, the Bearish Harami is a great pattern to watch for when the price is on a downtrend.

Just wait for a pullback to start, and then spot when the Bearish Harami appears.

That often signs the end of the pullback and the start of the new leg to the downside.

Here’s an example:

Strategy 2: Trading The Bearish Harami With Resistance Levels

Support and resistance levels are great places to find price reversals.

Since we are looking for moves to the downside, we want to trade the Bearish Harami using resistance levels.

How does it work:

Draw resistance levels on your charts
Wait for the price to go up and hit the resistance level
Check if a Bearish Harami appears at that level
Short when the price breaks the low of the last candle of the Bearish Harami
Set your stop loss and take profit levels, and expect a move to the downside

Here’s an example:

Strategy 3: Trading The Bearish Harami With Moving Averages

Moving averages are great trading indicators to trade trends.

The idea here is to trade pullbacks to the moving average when the price is on a downtrend.

How does it work:

Find a downtrend, with the price jumping below a moving average
Wait for the price to go up and hit the moving average
Check if a Bearish Harami appears at the moving average
Short when the price breaks the low of the last candle of the Bearish Harami
Set your stop loss and take profit levels, and expect another leg to the downside

Strategy 4: Trading The Bearish Harami With RSI Divergences

This is a bit different from the other trading strategies.

To find a bearish RSI Divergence we want to see the price on an uptrend first, making higher highs and higher lows.

Here’s how it works:

Find an uptrend
Mark the highs that the price makes after each leg to the upside
At the same time compare the price highs with the RSI indicator
When you see the RSI making lower highs while the price making higher highs, you found your divergence
Now you wait until a Bearish Harami appears at a price higher high, aligned with an RSI lower high.
Short when the price breaks the low of the last candle of the Bearish Harami
Set your stop loss and take profit levels, and expect a move to the downside.

It looks like this:

Strategy 5: Trading The Bearish Harami With Fibonacci

Another popular way of trading the Bearish Harami candlestick is using the Fibonacci retracement tool.

Fibonacci shows retracement levels where the price will tend to revert frequently.

Depending on the strength of the trend, different levels are more likely to work better with the Bearish Harami pattern. Here you can learn more about the different Fibonacci retracement levels.

Here’s how the strategy works:

You want to see the price on a downtrend, or at the start of a new one
Then you wait for a move to the upside, they always happen at some point
Pick your Fibonacci tool and draw the levels from the high to the low of the move
When the price hits a Fibonacci level and prints a Bearish Harami, that’s what you are waiting for
Short when the price breaks the low of the last candle of the Bearish Harami
Set your stop loss and take profit levels, and expect a move to the downside

Here’s an example:

Strategy 6: Trading The Bearish Harami With Pivot Points

Pivot Points are automatic support and resistance levels calculated using math formulas.

If you are day trading, the Daily Pivot Points are the most popular, although the Weekly and Monthly are frequently used too.

Here’s how to trade the Bearish Harami pattern with Pivot Points:

Activate the Pivot Points indicator on your charts
Check which Pivot Points are above the price, those will tend to work as a resistances
Ideally, you want to see the price on a downtrend, although it’s not required
Wait for a price move to the upside to a Pivot Point level
At that level, you want to see the Bearish Harami pattern appearing, meaning that the level is being rejected
Short when the price breaks the low of the last candle of the Bearish Harami
Set your stop loss and take profit levels, and expect a move to the downside

What Is The Success Rate Of The Bearish Harami?

According to the Encyclopedia of Candlestick Charts by Thomas N. Bulkowski (link), the Bearish Harami candlestick pattern has a success rate of 53%.

This is what you learned today

The Bearish Harami is a three-candle pattern.
To be valid, it must appear after a move to the upside.
It’s a bearish reversal pattern, meaning that it signs a potential reversal to the downside.
To increase the accuracy, you can trade the Bearish Harami using pullbacks, moving averages, and other trading indicators.
The winning rate of the Bearish Harami is 53%.

Now I want to hear from you.

Do you trade the Bearish Harami candlestick pattern?

Let me know in the comments below.