Harami in Japanese language means pregnant. This pattern forms by two candlesticks, the first one is bigger and the other one smaller. The smaller candle is completely engulfed by the body of the first candle. It looks like a pregnant woman looking from the side.
There are two kinds of Harami. The one that forms at the bottom of a bearish market is a Bullish Harami. And the pattern that forms at the top of an uptrend is a Bearish Harami.
Harami is a reversal pattern:
There is another kind of Harami which is called “Harami Cross”. This pattern is exactly the same as the regular Harami. The only difference is that in Harami Cross the small candle is a small Doji candle:
Although I said that Harami is a reversal pattern, but you have to be careful not to take any position as soon as you see a Harami, because this pattern is not that strong. Only on bigger time frames like weekly and monthly it can be considered as a reliable reversal pattern. I do not trust it on the smaller time frames at all. Even if you trade this pattern on the bigger time frame, having a reasonable stop loss is a must.
The below screenshot shows a Bullish Harami formed on EUR/USD weekly chart. As you see in this case it worked as reversal pattern the price went up strongly after forming this pattern:
This is another one. Also look at the Dark Cloud Cover:
And this is a Bearish Harami on GBP/USD weekly chart that worked as a reversal pattern strongly:
Bullish Harami Corss on GBP/USD weekly chart:
Bullish Harami Cross on GBP/USD weekly chart: