The bearish harami pattern and an easy way to profit using this one pattern are significant for traders to know.
Harami itself is a candlestick pattern that is often used in technical analysis.
Therefore, knowledge of this candlestick’s bearish and bullish patterns is essential for every trader.
Here is a full review of this pattern, including tips for using it when trading.
What are Bullish and Bearish Harami
This pattern can be interpreted as a candlestick position that shows a price trend signal that reverses in the direction of falling prices.
The asset price position can be called bearish if there is an uptrend. This pattern indicates that the uptrend signal will soon turn into a downtrend.
Usually, this one candlestick is indicated by the presence of two bullish and bearish candlesticks in a side-by-side position.
Bullish harami is a signal with the opposite position of a bearish candlestick. The opposite of the previous pattern, this bullish harami will occur when the first candlestick indicates a downtrend position.
When two candlesticks, namely a downtrend, side by side with an uptrend, it indicates that the downtrend signal will end soon.
Benefits of Bullish and Bearish Harami
These two signals are indeed beneficial for traders, including the following:
- Indicates a potential change in trend in the trading market
- Simplify the process of analyzing market price sentiment
- The right trading entry strategy
- Provides an opportunity for a high rate of return risk
- Simplify the process of analyzing buy and sell positions
The benefits possessed by these two patterns indeed had quite a significant impact on the trading transactions carried out. Therefore, traders can later earn big money if both can be understood correctly.
Disadvantages of Bullish and Bearish Harami
Although it has several benefits, these two patterns are inseparable from shortcomings. Below are some of the drawbacks:
- Not suitable for short-term traders
- Still need other confirmation tools
How to Get Profit from Bearish Harami
(Image: The Investing ID)
For trading with bearish harami, you can pay attention to the candlestick pattern above.
The picture shows the price movement in the trading instrument before the Harami candlestick pattern appears. Here’s the guide:
- First, ensure that all the conditions for forming this bearish candlestick have been met. If you are sure, then you can start doing an opportunity analysis.
- Next, as an entry, you can see the previous open candlestick, then draw a horizontal line or trendline on the last available candlestick and wait for the next candlestick to break out as confirmation.
- Next, you can make a sell entry when the next candlestick closes. On the other hand, you can place a stop loss position above the Harami candlestick.
- Then, if bearish occurs in an overbought position, it will be a strong signal that the uptrend will soon turn into a downtrend.
Tips for Using the Bearish Harami Pattern when Trading
To be able to achieve maximum cash when trading with this candlestick pattern, consider the following tips:
Determine the point of support and resistance
Please note this bearish pattern has high accuracy when it approaches or touches the resistance line. Therefore, you must know the support and resistance points when doing the analysis.
Combine with other candles
Like other candlestick patterns, technical analysis with Harami also requires other indicators to confirm the results. You can use stochastic, Fibonacci, or price action methods.
Put a stop loss
So that losses can be minimized, you also need to place a stop loss. In a bearish pattern, the stop loss can be set by several pips above the upper shadow of the first candle.
Use a demo account first.
Finally, to familiarize you with this pattern, it’s a good idea to practice using a demo account first. Later, if you understand, then please switch to a real version.
Thus a review of bearish Harami is essential to know. See articles about crypto assets, blockchain, and others only at Indodax Academy.