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The previous reversal patterns are relatively strong signals of the trend reversal. The Harami pattern is an "intermediate strength" trend change signal. As a rule when this pattern appears it indicates the market is turning flat.
The harami pattern — that is «pregnant» in Japanese — is a candle with a small real body that appears within the larger real body of the preceding candle (Figure 1). The first candle is like a mother and the second candle the child that emerges from its belly.
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Figure 1. Harami - a reversal pattern
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If candles in the engulfing pattern must be of the different colors in the harami it isn’t essential. The second candle must have a small body and the first candle must have a very large real body. The body of the second candle must be within the body of the first candle. The sizes and relative positions of the shadows are not important. The smaller the second body the higher the potential of a reversal occurring.
If the second candle of the pattern is a doji it is called the harami cross (sometimes it is also called — petrifying pattern). Such a pattern is more siginificant as it contains an «omnipotent» doji.
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Figure 2. Example of the harami pattern
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