<p>Harami is a two‑candle candlestick pattern that signals a possible pause or reversal in the prevailing trend. The pattern consists of a relatively long first candle followed by a much smaller second candle whose entire body lies inside the body of the first candle. The name comes from the Japanese word meaning “pregnant,” reflecting the visual of a smaller candle “carrying” the larger one.</p>

<h2>How It Works</h2>
<p>The first candle shows strong momentum in the current direction—either a long bullish candle in an uptrend or a long bearish candle in a downtrend. The second candle opens within the range of the first candle and closes with a small body, indicating that buying or selling pressure has weakened. Because the second candle’s high and low are both contained within the first candle’s body, traders interpret this as a loss of conviction among the dominant market participants.</p>
<p>When the Harami appears after an extended move, it often precedes a short‑term consolidation or a trend change. Traders typically wait for confirmation—such as a break of the Harami’s high or low, or a subsequent candle in the opposite direction—before acting on the signal.</p>

<h2>Why It Matters</h2>
<p>The Harami pattern provides a simple visual cue that market momentum may be exhausting, helping traders identify potential entry or exit points. For example, if a stock has risen sharply for several sessions and a bearish Harami forms (a long white candle followed by a small black candle inside its body), a trader might consider tightening stop‑losses or preparing for a short position, especially if the next candle closes below the Harami’s low. Similarly, a bullish Harami after a downtrend can warn of an impending bounce. By recognizing this pattern, intermediate traders can improve timing and reduce the risk of entering trades against fading momentum.</p>