READ ALL OF THIS ONE, AND DEFINATELY THINK ABOUT THIS ONE LEE, LINK
- Harami ~ is a 2 candlesticks reversal, and can be bullish or bearish, a bullish Harami will occur in an downtrend and bearish Harami will occur in an uptrend. The first candlestick in the Harami continues the trend, and the second candlestick in the Harami can be either colour and has a smaller body contained within the body of the first candlestick, it could also be a Doji proper, it doesn’t matter if either candle has a wick. Confirmation is determined by the reversal trading above/below the highest/lowest point of larger candlestick in the pattern
Who is in control ?, the market is in an established trend, and that party is in control, however, with the second candlestick, that party can no longer continue that trend, as the second candlestick shows that neither party was dominant, and this second candlestick shows indecision. At this point it is not a strong signal due to that indecision, and it could just mean a halt in trend, therefor confirmation of reversal or continuation is needed, and as many traders will have tightened there SL due to that indecision, it would be confirmed if the price broke through that SL, this confimation is either above or below the larger candlestick, the reversal would have then been validated, and it would then become a stronger signal due to the fact that the the bulls or the bears would be leaving because of that SL, and the other side would be entering because of that validation
Confirmation may not come straight away, it might take a candlestick or three to break above/below that first candlestick, ie. the confirmation
F=MA 