We will discuss in this article one of the most well-known Japanese candlestick patterns, which is considered one of the easiest patterns to spot and is used by most traders, as it provides accurate and strong entry points. This pattern is also called the “pregnant woman,” and we will see why.
So, what are the conditions for this pattern to form?
Where does it appear?
What is the psychology behind its formation?
How do we trade using this pattern?
Definition of the Bullish Harami Pattern:
It consists of two candles. The first is a bearish candle with a large body, and the second is a small candle (either green or red), provided that both its opening and closing are within the body of the first candle. This is an essential condition for the validity of the pattern. It is called the “pregnant woman” due to its visual similarity. It is also considered the inverse of the bullish engulfing pattern, which we explained in a previous article. In this case, the first candle is considered to engulf the second one.
It is a bullish pattern that forms only at support levels, signaling a potential reversal from a downtrend to an uptrend. It is preferable to wait for a confirmation candle that closes above the pattern, meaning above both candles.
Psychology Behind Its Formation:
At the end of a bearish wave, when the first bearish candle of the pattern is formed, a small candle begins to develop within the body of the bearish candle. This small candle can be either green or red, reflecting emerging buying pressure. The key condition is that both the opening and closing of this candle remain within the body of the first candle. We do not focus on the wicks; what matters is that the candle body stays inside the first one. A confirmation candle that closes above both candles is needed to validate entry into the trade.
How Do We Trade Using This Pattern?
When the pattern appears at a support zone within an uptrend, we enter a buy trade immediately after the pattern forms and the confirmation candle closes. The stop loss is placed below the pattern, and the targets, as shown on the chart, are set at three times the stop loss.
