Candlesticks - Vol 10 - Harami

http://www.YourTradingCoach.com - Candlestick Charting - Vol 10 - The Harami

Category:

Howto & Style

Tags:

• trading
• candlestick
• charting
• analysis
• market
• forex
• emini
• e-mini
• stock
• futures
• technical

[faYte0607]

Hi Lance,

Just wondering, @5:55, can the 4th and 5th candle be a Harami as well since the 5th candle's real body is inside 4th candle's real body? Also the 6th & 7th pair as well as the last 4th & 5th pair.

If so, then it's really uncertain which direction the stock will go even with a confirmation, just a game of probability.

[YourTradingCoach]

@faYte0607

Hi faYte0607,

No. These are not Harami. These videos demonstrate reversal patterns. As such, price must be moving directionally prior to the pattern. ie. a bullish harami occurs at the bottom of a downward move. A bearish harami occurs at the top of an upwards move. In the examples you've suggested, price is contained within a narrow range sideways congestion. Any patterns within such an environment are invalid. Context is essential in using patterns.

Cheers Lance.

[89myacc]

Hi I just wanted to ask if the shadow of the second candle is not contained within the body of the first would that count as a harami?

[YourTradingCoach]

Hi 89myacc,

Correct. The harami definition requires the real body of the 2nd candle to be within the real body of the 1st. If the shadow extends beyond the real body, it still meets the definition. Be sure to consider the psych of the pattern though - every pattern is unique. If the shadow has broken the real body, what will that mean in that case? See my Advanced Candlestick Trading articles on my website for more.

Cheers,

Lance.

[YourTradingCoach]

Hi TheDjbang,

Generally this is considered more powerful. Of course, the even more important information is in considering the context of the pattern - where is it occurring within the market structure.

Cheers,

Lance.