02 Dec
How to analysis and Trade with Bearish Harami Pattern
In this blog, we will see about the Bearish Harami Pattern, which is one of the Japanese candlestick charting techniques. We will deeply describe the Bearish Harami Pattern formation, structure, theory, and techniques to analyze and make profit with this pattern.
You will learn more about the Bearish Harami Pattern in detail, which you could use in your trading technique. So read the full blog to get a better understanding of the pattern and techniques. Let’s dive into the concept.
Table of Contents
Introduction of Bearish Harami Pattern
The Bearish Harami Pattern is a trend reversal pattern. It is formed on the Low Trend in the chart. So the prior trend should be a downtrend. If this pattern is formed in the High trend, it has the possibility that this pattern will work 80% in the market.
Bearish Harami is a multiple candlestick pattern. It has two candlestick formations. The first candle is a bull candle and second is a bear candle. Now if you see in the above image, the first bull candle covers the second candle body fully. So it forms like a harami candle that shows us the market is going to reverse.
If you see in the above image, there is a Spinning Top formation at the low trend. So as per the single candlestick pattern theory of Spinning Top formation, the market is going to reverse. Then we also got confirmation that there is also a bear harami pattern is formed. Overall we have strong confirmation that the market will definitely move down.
Theory of Bearish Harami Pattern
Now we will be analyzing how the market will perform in this pattern. And how to analyze and take trade with this pattern.
As you see in the above image the Bearish Harami formed in the high trend. Then you can also see that there is a Shooting Star formation. Before these patterns were formed there was an uptrend. You can see that the market has full control over the buyers and reached the high price. Then the seller pushed the market for the reversal at the resistance level. This pattern should be formed in a higher timeframe. Then we can also analyze this pattern in the inner timeframe to check for structure formation. So we can take a Sell Entry in the next running candle.
Confirmation of Bearish Harami Pattern
If the next candle of the Bearish Harami breaks the previous support trend line, we can get confirmation that the market is going to fall. So we can take a sell entry to make a profit.
Entry for Bearish Harami Pattern
The Entry for the Bearish Harami Pattern will be between the running candle open price and the previous candle low price by analyzing in the inner timeframe to take entry in the sell range as shown in 1.
If the pattern is formed as shown in 2, you make an entry by analyzing the inner timeframe and entry at the resistance level.
Note: For taking entry you should always analyze the 15 min or lesser timeframe. You should take an entry on the cheapest price, so you can make a huge profit.
Stop Loss for Bearish Harami Pattern
The Stop Loss for Bearish Harami Pattern will be the low price of the anyone of the Bearish Harami as shown above image.
Steps to check before taking the entry with this pattern.
Step 1: Search for the Bearish Harami pattern in the higher time frame.
Step 2: Check if the pattern is in a high trend and the prior trend should be an uptrend.
Step 3: Check whether the bear harami is formed correctly. And you also check the 2nd candle that shows any single candlestick pattern.
Step 4: Check the structure formation if any in the inner timeframe of the pattern. If you get the perfect structure move on to the next step.
Step 5: Set entry and stop loss level as discussed in theory and execute the trade.Step 6: Check for confirmation that the previous resistance line is broken, we also got confirmation that it is on a high trend, and the second candle also has a reversal pattern, so the market will surely move down and we can make a huge profit.
Conclusion
In the overall analyze, this pattern shows us the possible reversal of the trend. For more in depth understanding and learning, you can contact classroom of traders to get more knowledge in stock market trading.
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