Bearish Harami Pattern: When the Trend's Momentum Quietly Stalls

The uptrend has been running. Then a large green candle — and the next day, a small red candle that barely moves inside the prior day's range. The buyers who dominated yesterday suddenly can't extend the move.

That quiet loss of momentum is what the bearish harami captures. It's not the thunderclap of a bearish engulfing — it's the whisper that the rally might be tired.

---

---

What Is the Bearish Harami?

Candle 1 (Mother): A large bullish (green) candle. Wide body, buyers in control.

Candle 2 (Child): A small bearish (red) candle whose entire body falls within the body of Candle 1.

• Opens within the first candle's body
• Closes within the first candle's body — above Candle 1's open
• Body is significantly smaller than Candle 1

The contrast: bulls had a massive range on Day 1. Day 2 was narrow, contained, and slightly bearish.

Formation rules:

• Candle 1: Large bullish candle
• Candle 2: Small bearish candle, body within Candle 1's body
• Context: Appears in an uptrend or after a rally
• Second candle should be roughly 25–30% of the first or smaller

Strength rating: 65/100.

---

The Psychology

Day 1: Buyers push hard. A large green candle with buyers in full control.

Day 2: The market opens lower within yesterday's range — not at a new high. It stays contained. Buyers can't build on yesterday's gains. The close is marginally below the open — for the first time in the trend, sellers have edged out buyers in a session.

The range contraction is the key: buying energy has visibly dropped. The bulls are still in the range of yesterday's session — they haven't lost it. But the fuel behind the rally is depleting.

---

Position-Based Interpretation

At the Top of an Uptrend — Reversal Warning

After a sustained rally, the bearish harami says: "the engine is running low." Buyers pushed hard yesterday but couldn't follow through today. At major resistance areas — previous highs, key Fibonacci levels — this is a notable warning.

Key confirmation: A third candle that closes below the midpoint of the first (green) candle. At that point, sellers have recovered the majority of the prior session's gains and the reversal is confirmed.

At or Near Key Resistance

The bearish harami at resistance is the highest-conviction variant. The resistance created friction on Day 2 — buyers couldn't extend the range above the level. The pattern is the visual representation of the level holding.

After a Momentum Exhaustion Move

If the first candle was a parabolic move (large green candle on extremely heavy volume, well above any recent range), the harami following it can mark a short-term top — even if the larger trend is still up.

---

How to Trade the Bearish Harami

Entry: On confirmation — the third candle closing below the midpoint of the first candle's body.

Stop loss: Above the high of the first (large green) candle. If price breaks above that level, the reversal thesis is invalidated and the rally is continuing.

Take profit: Prior support level below, a key moving average, or a measured move from the first candle's high to target.

Caution: The bearish harami is a warning, not an immediate trade signal. Trading it after only two candles has a high false-positive rate. Patience for the confirmation candle significantly improves the win rate.

---