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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 Cross

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As of 10/19/2017
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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 cross is a modification of the bearish harami candlestick pattern. There are a few differences in treatment of the second day. The bearish harami cross shows a doji candlestick on the second day whose trading range fits inside the prior day, whereas the bearish harami sports a black candle with shadows that can poke outside the prior candle's body. A doji signals indifference whereas a black candle means "bearish." Yet the bearish harami cross is supposed to act as a bearish reversal. In fact, testing shows that this candle pattern is actually a bullish continuation 57% of the time. That is better than the 53% continuation rate of the bearish harami. In other words, the bearish harami cross works better, but not in the direction that traders expect.

Bearish Harami Cross Important Results

Theoretical performance: Bearish reversal
Tested performance: Bullish continuation 57% of the time
Frequency rank: 45
Overall performance rank: 80
Best percentage meeting price target: 69% (bull market, up breakout)
Best average move in 10 days: -3.13% (bear market, down breakout)
Best 10-day performance rank: 41 (bull 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 cross candlestick
Bearish Harami Cross
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Bearish Harami Cross Discussion

The bearish harami cross is supposed to be a bearish reversal candle, but it actually acts as a bullish continuation of the existing up trend 57% of the time. I still consider that "near random," so do not get too excited. What is worse is the overall performance rank of 80. That is downright awful. The worst performance a candle pattern can rank is 103 where 1 is the best rank. It suggests that the price trend after the breakout does not last long, and that is supported by the statistics, too.

The best average move over 10 days after the breakout highlights the poor performance. Price drops 3.13% in a bear market. A decent move would be a drop of 6% or more. The best 10-day performance rank is 41 and that occurs after a downward breakout in a bull market. That also seems to continue a trend, that of the best performance coming from moves against the market: upward breakouts in a bear market or downward ones in a bull market. The only explanation I can offer for this is that it occurs because of a snapback rally or drop. The market is either overbought or oversold and traders jump in as a mass and push price in the opposite direction. Of course, no one really knows the answer, including me.

Bearish Harami Cross Identification Guidelines

CharacteristicDiscussion
Number of candle linesTwo.
Price trend leading to the patternUpward.
ConfigurationLook for a tall white candle in an upward price trend. The next day, a doji appears that is inside (including the shadows) the trading range of the white candle.
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Bearish Harami Cross: 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. Bearish harami cross candles that appear within a third of the yearly low perform best -- page 394.
  2. Select tall candles -- page 395.
  3. The best performance from a reversal comes after an upward retracement of the downward price trend -- page 396-397.

Bearish Harami Cross Example

The bearish harami cross candlestick on the daily scale

The chart shows a bearish harami cross circled in red on the daily chart. Price trends upward leading to the two line pattern then a tall white candle appears. Following that, a doji shows. A doji is a candlestick that has opening and closing prices within pennies of each other. The doji, including its shadows, fits inside the high-low range of the white candle. Those versed in chart patterns will recognize this as an inside day.

In this example, price breaks out upward the day after the doji, continuing the upward trend. That happens 57% of the time in a bull market. Notice that the trend does not last that long -- three days before price peaks (in a few more doji) and reverses.

-- Thomas Bulkowski

 

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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. I have the body of a god. -- Buddha.