CANDLE 15: THE HARAMI IS PREGNANT WITH TRADING POSSIBILITIES When you visualize the harami candle, you should imagine that the first candle is like a mother and the second candle the child that emerges from its belly. That is where the name harami or pregnant comes from. The harami candle can occur both after an uptrend or downtrend. To keep this discussion clear, however, for the sake of example I will assume a stock is in a uptrend. Immediately preceding the harami candle, there should be a large, real body dark candle. When this candle occurs, the bulls appear to be fully in the drivers seat. The next day, however, a small real body candle appears within the larger real body. This is the harami candle. In my experience, the signal is more powerful if the second days candle is near the middle of the trading range of the first. Always look carefully at the next days candle -- the one that follows the harami candle. Sometimes harami merely signifies that the stock is entering a period of consolidation (the shares will trade sideways). If, however, the stock youre examining rallies the day after the harami candle takes place, then there is an increased likelihood that the shares have put in a Minor bottom.
Posted on: Sat, 13 Sep 2014 10:35:14 +0000
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