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Thomas Bulkowski’s successful investment activities allowed him to retire at age 36. He is an internationally known author and trader with 30+ years of stock market experience and widely regarded as a leading expert on chart patterns. He may be reached at

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Bulkowski's Bearish Harami

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Market
Industrials (^DJI):
Transports (^DJT):
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Nasdaq (^IXIC):
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As of 01/20/2017
19,827 94.85 0.5%
9,225 60.61 0.7%
658 0.48 0.1%
5,555 15.25 0.3%
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Tom's Targets    Overview: 01/18/2017
19,250 or 20,250 by 02/01/2017
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685 or 630 by 02/01/2017
5,700 or 5,400 by 02/01/2017
2,200 or 2,350 by 02/01/2017
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Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information.

My book, Encyclopedia of Candlestick ChartsEncyclopedia of Candlestick Charts book., pictured on the left, takes an in-depth look at candlesticks, including performance statistics.

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The bearish harami is supposed to act as a bearish reversal, but testing shows that it is a bullish continuation pattern 53% of the time. That is what I call "near random." An upward price trend leading to the start of the bearish harami helps price close above the top of the candle pattern and score an upward breakout -- continuing the uptrend. Once price breaks out, the trend is not an exciting one. Looking at the various combinations of bull/bear and up/down markets, the price change over 10 days is less than half the 6% I consider good. That is why overall performance ranks 72nd (where 1 is the best performance out of 103 candlestick types).

Bearish Harami Important Results

Theoretical performance: Bearish reversal
Tested performance: Bullish continuation 53% of the time
Frequency rank: 26
Overall performance rank: 72
Best percentage meeting price target: 64% (bull market, down breakout)
Best average move in 10 days: -4.01% (bear market, down breakout)
Best 10-day performance rank: 50 (bear market, down breakout)

All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.

The above numbers are based on hundreds of perfect trades. See the glossary for definitions.

The ideal bearish harami candlestick
Bearish Harami
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Bearish Harami Discussion

As I mentioned in the introduction, the bearish harami functions randomly, so do not depend on it acting as a reversal of the primary trend. In fact, it acts as a continuation pattern more often than a reversal. The overall performance rank of 72 suggests that the trend after the breakout is a weak one. A check of the statistics confirms this. In fact, the best performance 10 days after the breakout is a drop of 4.01% in a bear market. A good move would be 6% or more, so this falls short. The drop ranks 50th out of 103 candle patterns, or about mid range.

The frequency rank is 26 and that means you will be able to find plenty of bearish harami's in a historical price series. Whether or not it is worth the hunt I will leave up to you.

Bearish Harami Identification Guidelines

CharacteristicDiscussion
Number of candle linesTwo.
Price trend leading to the patternUpward.
ConfigurationLook for a tall white candle followed by a small black one. The opening and closing prices must be within the body of the white candle. Ignore the shadows. Either the tops of the bodies or the bottoms (or both) must be a different price.
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Bearish Harami: Three Trading Tidbits

If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book where the tips appear.

  1. If the bearish harami appears near the top of a trend channel, then a downward breakout is more likely -- page 379.
  2. Select tall candles -- page 377-378.
  3. Volume gives performance clues -- page 378-379.

Bearish Harami Example

The bearish harami candlestick on the daily scale

The chart shows a bearish harami, circled in red, on the daily scale. This one appears in an upward price trend, as required. The first candle is a tall white one followed by a black candle with a smaller body. The body fits within the body of the white candle.

The breakout from this candlestick pattern is upward. A breakout, by the way, is a close either above the top of the candlestick pattern or below the bottom of it. In this example, price closes above the top of the candle first, so the breakout is upward.

This bearish harami candle acts as a continuation of the upward price trend, but notice that the trend soon ends. Also notice that the primary trend is downward. Although this bearish harami happened to breakout upward shortly before a downturn, the setup is correct. In other words, for the best results as a reversal candle, look for the bearish harami to appear at the top of an upward retrace in a downward price trend. When price breaks out downward, it rejoins the existing primary trend and price tends to drop.

-- Thomas Bulkowski

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See Also

Written by and copyright © 2005-2017 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions. See Privacy/Disclaimer for more information. I fought the lawn, and the lawn won.