This candlestick pattern is considered a sign of a trend reversal, so identifying it is essential for those who want to open successful trades on Binomo. Let’s start!
What is the Harami pattern?
Harami means “pregnant” in Japanese. The pattern gets its name because of how it looks on trading charts. It is made of two consecutive candles, one large and the other small, with both of these being of different colors. The first candlestick is called the “mother” due to being larger and embodying the second candlestick ahead of it, thus roughly creating the visual of a pregnant mother.
How to read the Harami pattern?
The Harami pattern is made of two candlesticks, the first candlestick being large and the second being smaller and of the opposite color (indicating a change in trend). Several candlesticks following the same trend usually precede the larger candlestick.
Harami patterns can be classified while you trade on Binomo as follows:
- Bullish Harami Pattern.
- Bearish Harami Pattern.
A Bullish one is when a large bearish red candle is followed by a much smaller bearish one the next day. This second candlestick has to be contained entirely within the vertical range of the previous one.
For a bullish pattern, a smaller body on the second candlestick that closes higher within the body of the previous day’s candle signals a greater likelihood that a reversal is to follow. Thus, traders can take this as a sign that the market trend is going to change to a rise and so begin to purchase more of the stock or asset while online trading on Binomo.
In contrast, a bearish harami candlestick is seen as a large bullish candle followed by a smaller bearish one the next day. The first candle is usually preceded by a number of rises that form an established uptrend. The smaller (red) candle is contained within the open and close of the bullish one coming before it. This signals a trend reversal is coming in the form of a fall, so traders take this as a sign to sell their current holdings.
How to use the Harami pattern?
So, how to trade in the Binomo app/website using the pattern? Harami is best used in long-term trading, such as the 1-day timeframe. The right moment to open a trade would be the appearance of the third green candle, which clearly shows where the trend will move.
The Harami pattern is an excellent tool since it is quick to identify and provides the opportunity for those trading online on the Binomo platform to capitalize on market movement. However, it is important to remember that the pattern should be judged in the context of the market trends leading up to it. Along with that, the price action can also give the trader a better insight into the implications of the pattern.