What is a harami candlestick?
A harami candlestick pattern consists of two candles and is a considered a reversal candle. It is formed when a large candle is formed by a smaller candle which sits inside the larger candle, but for this to happen there has to be a jump in the market price followed by indecision producing i highly probable reversal pattern
A bullish reversal harami
A bullish reversal harami candlestick pattern starts with a strong bearish candlestick, after this the market price opens higher on the next candlestick and closes below the open of the previous larger bearish candlestick.
A bearish reversal harami
A bearish reversal harami candlestick pattern is the opposite to the bullish candlestick harami starting with a strong bullish candlestick, after this the market price opens lower on the next candlestick and closes above the open of the previous larger bullish candlestick.
A harami candlestick after a strong trend or at a key support or resistance level gives a strong indication for a reversal. This is because after a trend has been exhausted and the price gaps in the opposite direction traders who were following the initial trend start to take there profits anticipating the end of the trend and a trend reversal.