The Bullish Harami is a two-candlestick pattern that suggests a potential reversal from a downtrend to an uptrend.
It is considered a bullish signal in technical analysis and often appears at the bottom of a downtrend.
Characteristics of a Bullish Harami:
- First Candle (Bearish): A large red (bearish) candlestick that continues the current downtrend.
- Second Candle (Bullish): A small green (bullish) candlestick that is completely within the body of the previous red candle.
- Gap or No New Low: The second candle opens higher than the previous close (or very close to it) and remains small, indicating a slowdown in selling pressure.
Meaning & Psychology Behind the Pattern:
- The large bearish candle suggests strong selling pressure.
- The small bullish candle within the previous candle’s range indicates that selling momentum is weakening.
- If followed by a confirmation candle (a bullish close after the pattern), it suggests that buyers are stepping in.
Trading Strategy:
- Entry: Traders usually wait for confirmation with a bullish candle after the pattern.
- Stop-Loss: Placed below the low of the pattern.
- Target: Can be set at previous resistance levels or based on risk-reward ratio.
Would you like a visual representation or more details on how to use it in trading strategies?
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