Today, I will introduce to you how to use the Bearish Harami candlestick pattern in Forex trading. This is a good signal for orders following the downtrend. This article will provide all the best knowledge about this special candlestick pattern.
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What is a Bearish Harami candlestick pattern?
Harami is the common name for a type of candlestick pattern shaped like a pregnant woman. Bullish Harami is a candlestick pattern signaling the reversal of prices from falling to rising. In contrast, the Bearish Harami candlestick pattern is a signal for a reversal from up to down.
These two candlestick patterns are very good, highly accurate signal pairs. Traders always give an eye on them when they appear on the price chart.
Structure and meaning
A standard Bearish Harami pattern consists of 2 candles.
+ The first candlestick is a strong green bullish one.
+ The second candlestick is a red (bearish) candle lying within the first one.
Combining the 2 candles of this pattern, you will get a Bearish Pin Bar (aka Shooting Star). These are popular candlesticks signaling bearish trends. This explains why Bearish Harami is a reliable bullish to bearish reversal signal.
On the Japanese candlestick price chart: This candlestick pattern usually appears at the end of uptrends and predicts a future price decline. Sometimes, the Bearish Harami pattern also appears in a downtrend and warns of the continuation of the market trend.
Different variant patterns
Compared to the standard pattern, the Bearish Harami variant has a slightly different structure. The second candlestick is a Spinning Top or Pin Bar. This variant pattern is also a very noticeable signal of experienced traders when it appears.
How to trade Forex effectively with the Bearish Harami
There are many ways to use the pattern for Forex trading with a high win rate. Here, I will show you 2 trading strategies with this reversal candlestick pattern as a confirmation signal.
Important notes: Bearish Harami is a bearish signal in the future so you can only open SELL (short) orders.
Strategy 1. Place SELL orders at the top with Bearish Harami
This trading strategy is very simple but quite risky. As long as the price creates a Bearish Harami pattern, open a SELL order right after that.
+ Entry Point: As soon as the price completes the Bearish Harami candle.
+ Stop-Loss: At the shadow of the first candlestick in the pattern
+ Take-Profit: When the price touches old support levels that have been formed in the past.
Strategy 2. Open an order following the downtrend
This trading strategy is considered to be safer. However, you need 2 factors as follows: a downtrend market and Bearish Harami appearance. Place a SELL order right after that because it is likely that the price will continue to decline sharply.
+ Entry Point: As soon as the price completes the Bearish Harami candle.
+ Stop-Loss: At the shadow of the first candlestick in the Bearish Harami candlestick pattern
+ Take-Profit: When the price touches old support levels that have been formed in the past.
In conclusion
The above are just test transactions to get you familiar with the Bearish Harami. Perform these transactions right on your Demo account to verify the effectiveness. Finally, I would like to wish you all success in trading.
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