Discover the nuances of the Bearish Harami, a pivotal two-candle reversal pattern that signals potential market downturns after uptrends. Learn how this formation, with a 68% reliability rate, can guide traders in spotting trend exhaustion and optimize entry and exit strategies.
What Is a Bearish Harami Candlestick Pattern?
The bearish harami is a two-candle reversal pattern that often shows up when an uptrend starts running out of fuel. You get a big bullish candle first, then a smaller bearish candle that sits fully inside the first candle’s real body. “Harami” is Japanese for “pregnant,” which fits—the second candle is basically tucked inside the first.
You’ll usually see it near resistance or right after a strong push up, when buyers start hesitating and sellers finally show up. Compared to a bearish engulfing, it’s a quieter tell. Engulfings tend to feel more aggressive; the harami is more like an early warning that the trend is losing control.
Key Characteristics:
Big bullish first candle showing strong upside momentum
Small bearish second candle fully inside the first candle’s body
Best when it prints into resistance or after a stretched move
Much stronger when volume/indicators confirm the shift
Where Did the Bearish Harami Come From, and How Is It Used Today?
Candlesticks came out of 18th-century Japanese rice markets, and the logic still holds: price tells you when conviction changes. The bearish harami stuck around because it shows that transition pretty clearly across a lot of instruments.
Today traders use it in forex, stocks, and crypto, but it’s not a “see it, short it” pattern. It works best when the second candle shows fading demand (often lighter volume), momentum tools start rolling over, and price is pressing into a level that’s already rejected before. In practice it’s most useful for spotting trend exhaustion—either as a short setup with confirmation or as a heads-up to start protecting a long.
How to Trade the Bearish Harami Pattern
Bearish Harami Entry Rules: Breakout vs Retest
The standard entry is simple: short after a confirmation candle closes below the harami low. That breakdown removes the “maybe” from the setup.
If you’re more conservative, wait for a retest. Price breaks the low, then comes back to that level (or the nearby resistance shelf) and fails. That gives you a tighter stop and usually a cleaner read on whether sellers can defend. Entries get cleaner when the pattern lines up with a real level—prior swing highs, a 50–61.8% Fibonacci zone, a VWAP band, or a round number that’s been sticky.
Day traders often take the breakdown and manage aggressively. Swing traders usually prefer the break + retest because it improves the risk-reward profile and reduces whipsaw.
Stop Loss and Take Profit Targets for Bearish Harami Trades
A common stop is above the first candle’s high. It’s obvious, it’s structural, and it keeps you from getting chopped up if the uptrend resumes.
Targets usually come from:
Prior support (last swing low, base of the run, demand zone)
A minimum 1:2 or 1:3 R multiple, depending on the market's volatility
Position size comes from the stop distance, not from how “good” the pattern looks. If the stop is wide, size down. If it’s tight and the level is clean, you can lean in a bit more without blowing up the risk.
How to Reduce False Signals With Better Risk Management
Bearish harami works best as a piece of a setup, not the whole setup. Pair it with market structure, support/resistance, and at least one momentum read. That’s how you turn it from a coin flip into something you can actually track and improve.
If you want fewer bad trades, require more than one confirmation: level + breakdown, divergence + breakdown, or breakdown + retest. You’ll miss some moves, but the equity curve usually thanks you.
How Do You Confirm a Bearish Harami Before Trading It?
What Is the Confirmation Candle for a Bearish Harami?
The harami itself is a warning, not the trigger. The trigger is the next candle closing below the harami low. That’s the market proving sellers can actually break structure instead of just printing a small red candle inside a range.
If you skip confirmation, you’ll eat a lot of fake-outs—especially in strong bull trends where price just consolidates for a bar or two and then rips higher again. Waiting for that close below the low is the filter that keeps you out of most of the chop.
Does Volume Confirm a Bearish Harami Pattern?
Volume helps you judge whether the shift is real. If the second candle prints on solid participation, it suggests sellers are stepping in with intent. If volume dries up, it can still work, but it’s more like “buyers went quiet” than “sellers took control,” so you lean harder on the confirmation break.
Best Indicators to Confirm a Bearish Harami (RSI, MACD, MAs)
Useful confirmation signals traders commonly stack with a bearish harami:
RSI: Overbought (70+) plus bearish divergence (price higher highs, RSI lower highs)
MACD: Bearish crossover or histogram rolling over after a stretched run
Moving averages: Price losing the 20/50 EMA or a key daily MA after the pattern
Confluence: The more independent signals you have, the fewer “pretty pattern” losses you take
Best Timeframes for the Bearish Harami Pattern
Timeframe matters. A bearish harami on a daily or weekly chart tends to mean more because it reflects real positioning and real flows. On a 15-minute chart it can just be noise from a lunch-hour pullback. Many pros will still trade it intraday, but they demand cleaner structure breaks and tighter risk control.
Why Support and Resistance Matters for Bearish Harami Setups
Best Resistance Levels for a Bearish Harami Reversal
Harami patterns hit harder at resistance. Mid-range haramis are common and usually mediocre because there’s no real reason for price to reverse there.
If you see it at a prior swing high, a major Fibonacci retracement, or a well-defined supply zone, it’s a different story. That’s where trapped breakout buyers and profit-takers tend to cluster, so the reversal has a real catalyst.
Round numbers can add extra friction too. Levels like 1.1000 on EUR/USD, 500 on the S&P 500, or 70,000 on Bitcoin tend to pull in orders and headlines. When a bearish harami prints right into one of those, it’s often the first crack in the trend.
How to Use Trend Context to Filter Bearish Harami Signals
Don’t trade the pattern in a vacuum. If the broader trend is ripping higher with strong breadth and expanding volume, a single harami is more likely to be a pause than a reversal.
The best environment is a mature uptrend pushing into resistance, with signs of slowing momentum. In sideways consolidation or thin liquidity, the pattern shows up a lot and means very little.
Clean context filters most of the junk: trend direction, where you are in the range, what volume is doing, and whether the market is risk-on or risk-off.
How Does a Bearish Harami Form on a Candlestick Chart?
Bearish Harami Rules: What the Two Candles Must Look Like
The structure is simple, but the rules matter. Candle one is a wide green body that shows buyers are in control. Candle two is a smaller red body that opens near the prior close and closes above the prior open, so the entire real body is contained inside candle one’s real body. If that body containment isn’t there, it’s not a clean harami.
If the second candle’s body sits lower inside the first candle, the message is more bearish because it shows sellers pushing price back down within that range. Wicks can poke out—some traders allow that—but the real body inside the real body is the part you don’t compromise on if you want consistency.
Element | First Candle | Second Candle | Market Signal |
|---|---|---|---|
Body Size | Large, extended | Small, compressed | Momentum cooling |
Position | Defines the range | Fully inside the body | Indecision shows up |
Interpretation | Buyers in control | Sellers start leaning in | Trend starts weakening |
Volume | Often higher | Often fades (but not always) | Conviction slipping |
When Is a Bearish Harami Reliable (and When Is It Noise)?
Context is everything. A bearish harami is meant to be a reversal signal after an uptrend. If you’re already in a downtrend, it doesn’t carry the same weight and can be basically noise. The best ones show up after a strong run—think multiple green candles, expanding ranges, or a push into a prior swing high—because that’s where exhaustion actually makes sense.
Also pay attention to volatility. If the market has been chopping and the candles are already small, a “small second candle” doesn’t mean much. You want a clear contrast: strong push, then hesitation.
What Does a Bearish Harami Say About Market Psychology?
Why Buyers Lose Control During a Bearish Harami
The first candle is the crowd pressing the gas pedal—buyers are confident and price closes strong. Then the second candle prints smaller and red, and that’s the tell. It’s not that sellers have fully taken over yet; it’s that buyers stop pushing. That shift from control to hesitation is what the pattern is really showing.
That’s why it often appears at levels traders care about. Into resistance, late longs start taking profit, new buyers hesitate, and sellers get a cleaner spot to lean against. The sentiment shift is basically the market saying: “We tried higher, but it’s not as easy anymore.”
Once that’s visible, a lot of traders stop chasing and start managing risk. That alone can be enough to cap the move, even before a real breakdown happens.
How the Bearish Harami Signals Trend Exhaustion
Uptrends don’t die because of one candle—they die because demand dries up. After a sustained rally, the easy buyers are already in, and the next push needs fresh money. When that doesn’t show up, profit-taking starts to matter more, and the tape gets heavy.
The small second candle is the “pause.” It tells you the market is no longer trending cleanly, which is why you want confirmation before treating it like a real reversal.
Bearish Harami Examples and Real-World Trading Use Cases
Bearish Harami Example Trade: EUR/USD Case Study
A trader watching EUR/USD spotted a clean bearish harami into the 1.1250 resistance area on the 4H chart in late 2024. Price had pushed up hard for several sessions and was pressing into a level that had rejected before. The first candle was a wide green body, then a smaller red candle printed fully inside it.
Volume cooled off on the harami candle, which hinted buyers were backing off. At the same time RSI tagged overbought around 72 and MACD started diverging. That combination made it more than just a “nice-looking” two-candle pattern.
The short came after confirmation, with a stop above the harami high. Price rolled over and dropped roughly 180 pips over the next two sessions. The move accelerated once it lost the 20-period moving average, which kept the trade from turning into a slow grind.
How to Add Bearish Harami Rules to a Trading System
If you’re going to trade bearish harami consistently, build it into a rules-based process. Combine it with moving average slope, MACD histogram behavior, RSI extremes, and most importantly a real level. That’s how you improve on standalone pattern hit rates that are usually mediocre by themselves.
A simple checklist helps keep it clean: pattern quality, where it formed, confirmation break, volume read, and whether the broader trend supports a reversal trade.
Different markets behave differently. Stocks often respect major daily/weekly levels well. Forex tends to give cleaner haramis on 4H and daily structure. Crypto is noisier, so you usually need stricter confirmation and tighter execution.
RizeTrade's trading journal platform can help you track every harami trade and see what actually works for you—timeframe, level type, indicator mix, and which ones are just dead weight. That feedback loop matters more than any textbook definition.
Also adjust for regime. In choppy ranges, harami patterns can show up constantly, so you need stronger filters. In strong trends, you may get fewer signals, but the ones that form at major resistance can be high quality.
Is the Bearish Harami a Reliable Trading Signal?
Bearish harami is a solid heads-up signal, not a standalone trigger. Treat it like a clue that the uptrend is getting tired, then demand proof through structure breaks, confluence, and risk control.
Higher timeframes generally give cleaner reads, but the same logic works intraday if you’re strict about confirmation. Log the trades, review the losers, and you’ll quickly see which versions of the setup actually have edge.
When you combine it with level-based trading, position sizing, and disciplined exits, the bearish harami becomes a useful tool in a real system instead of a pattern you “hope” works.
How Do You Turn Bearish Harami Setups Into Measurable Trading Improvement?
The bearish harami is most useful when it’s treated as a repeatable process: context at resistance, confirmation below the low, and risk defined above structure. To make that process better over time, you need to review trades the same way you build them—by separating pattern quality, confluence (levels, RSI/MACD, moving averages), and execution (entry type, stop placement, and exit discipline). A trading journal makes those variables visible, so you can compare outcomes across timeframes, market regimes, and confirmation styles (breakdown vs break-and-retest) instead of relying on memory.
Logging each setup also helps you spot where false signals cluster—like choppy ranges or strong bull trends—and which filters actually reduce drawdowns without killing opportunity. Using a dedicated tracker such as Rizetrade trading journal analytics for pattern-based performance tracking can help organize screenshots, tag harami trades, and monitor PnL metrics so the pattern becomes a testable edge rather than a one-off idea.