Harami — Two-Candle Reversal Pattern

Harami is a two-candle reversal pattern where a small candle sits INSIDE the previous large candle’s body. The word “harami” means “pregnant” in Japanese — visually, the small candle looks like a baby inside the mother. Signals potential reversal.

📚 What is the Harami?

Two-candle pattern.

Candle 1: Large body in trend direction.

Candle 2: Small body inside candle 1’s body (in opposite direction).

Bullish Harami: large bearish candle followed by small bullish candle inside.

Bearish Harami: large bullish candle followed by small bearish candle inside.

🔍 How to Identify

• Candle 1 large in prior trend direction.
• Candle 2 small body, opens within candle 1’s body, closes within it.
• Body color opposite of candle 1 (preferable).
• Location at trend extreme or key level.
• Confirmation candle validates the reversal.

🧠 Market Psychology

Sudden compression after a large directional candle = trend losing steam. Smaller candle inside larger one shows hesitation. Trend may be exhausting.

💼 Trading Rules

🥇 XAUUSD-Specific Notes

• Harami at XAUUSD HTF zones moderately reliable.
• H4 / Daily best.
• Confirmation candle critical.
• Combine with RSI divergence.

✅ Confluence Checklist

Use these criteria to validate the setup before entry. The more boxes checked, the higher the probability:

• At HTF support/resistance.
• Bullish/bearish divergence.
• Volume drop on harami candle.
• Aligned macro reversal context.
• Strong confirmation candle next.

⚠️ Common Mistakes to Avoid

🎯 The Bottom Line

Harami at XAUUSD HTF zone with confirmation candle = moderate-to-high probability reversal. Always require the confirmation candle.

Part of the Best Trade Logic Pattern Library · 27 essential patterns for XAUUSD & forex traders