Read the Lines · Candlestick patterns
Harami Candlestick Pattern:
bullish, bearish & how to read it on ASX charts.
A harami is a two-candle pattern in which a large first real body is followed by a much smaller second real body that sits inside the range of the first body.
The word is used for both bullish and bearish versions. In plain English, a market that had been moving with conviction suddenly contracts into a much smaller session — evidence that the previous side’s control may be weakening.
Harami · quick answer
What does a harami candlestick pattern mean?
A harami shows a sudden contraction in price control. The first candle has a relatively large body. The next candle’s smaller body fits inside it, suggesting the market is no longer moving with the same conviction.
After a decline, a bullish harami can warn that sellers are losing momentum. After an advance, a bearish harami can warn that buyers are losing momentum. Neither version confirms reversal by itself.
At a glance
How to identify a harami
Large first body
The first candle shows strong directional movement.
Small second body
The next candle contracts sharply and sits within the first candle’s real body.
Context decides direction
After a decline it can be bullish; after an advance it can be bearish.
The second candle’s wicks can extend outside the first body. The core classical relationship is between the two real bodies.
Bullish harami
After a decline
A large negative candle is followed by a smaller body inside it. The market has stopped extending lower with the same force.
That can suggest selling pressure is becoming less dominant, especially if price later breaks above the small candle or begins forming a higher low.
Bearish harami
After an advance
A large positive candle is followed by a smaller body inside it. The market has stopped extending higher with the same force.
That can suggest buyer conviction is fading, particularly if later price breaks lower or momentum weakens.
What happened across the two candles?
A strong move suddenly lost range and conviction.
Imagine an ASX share has been falling and then prints a wide negative candle from $2.10 to $1.90. The next session opens at $1.94 and closes at $1.99. That smaller body sits inside the prior body. Sellers have not been defeated, but they failed to extend the move with the same strength.
The reverse logic applies after an advance. Harami is therefore best read as a contraction pattern: the market has become less decisive and the next evidence matters more than the label.
More useful when
The trend was previously clear.
- the first candle is genuinely large relative to recent sessions;
- the pattern follows a sustained trend;
- it forms near an important price zone;
- volume and liquidity are credible; and
- later price breaks in the reversal direction.
Less useful when
The market is already choppy.
- there is no meaningful prior trend;
- both candles are tiny;
- the stock is illiquid;
- price stays trapped inside the first candle; or
- a company announcement provides a clearer explanation for the pause.
9:00 AM · BOWERLINE PRO
Coffee. Market. Connected.
What stood out. The evidence behind it. What happened next.
Your morning BowerLine briefing.
Harami FAQ
Quick answers
Is harami bullish or bearish?
It can be either. A bullish harami appears after a decline; a bearish harami appears after an advance.
What is the difference between harami and engulfing?
They are opposite body relationships. In a harami, the second body sits inside the first. In an engulfing pattern, the second body covers the first.
Does harami guarantee reversal?
No. It shows contraction and reduced directional conviction. The previous trend can resume.
What confirms a harami?
A break beyond the small second candle in the reversal direction, supported by credible volume and broader structural improvement or deterioration, can add evidence.
Important information: This page provides general educational content about candlestick patterns and technical analysis. It does not provide financial product advice or recommendations, does not consider your objectives, financial situation or needs, and does not tell you whether to buy, sell or hold a financial product. Examples are educational, not forecasts or recommendations about any ASX security.
BowerLine 