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Wednesday, October 17, 2007

HARAMI CROSS BULLISH vs. BEARISH

Harami Cross Bullish & Harami Cross Bearish resemble Harami Bullish & Harami Bearish.
Harami Cross can be seen as the variation of Harami pattern.
The difference between Harami & Harami Cross is that for Harami Cross, the 2nd candle is a Doji.

Basically, Harami Cross Bullish & Harami Cross Bearish consist of 2 candles:
The first day is characterized by a long body candle, followed by a Doji candlestick that is completely contained within the range of the previous day's body.

With the appearance of a Doji, these patterns imply market indecision, signaling a possible change of trend.
Harami Cross pattern is usually seen as having higher chances of reversal as compared to Harami pattern.



HARAMI CROSS BULLISH PATTERN
Harami Cross Bullish
is a bottom reversal pattern / bullish reversal pattern.
It may be formed at the end of a downtrend, or during a pullback within an uptrend, or at the support.

When the price is a declining trend for some time, a two-candle pattern forms.
The body of the 1st candle is the same color as the current trend (should be a long black/red candle).
The body of the 2nd candle is a Doji that is completely within the body of previous day's candle.

What does this pattern imply?
The market has been overwhelmed by strong selling pressure for some time. All of a sudden, the buyers (bulls) step in and open the price higher than the previous day's close.
After the strong opening, the price moves only in a small range and is contained within the previous day’s body. At the end of the day, the price closes at the opening level, forming a Doji. The Doji indicates market indecision and a potential trend reversal. The volume of the doji’s day should also dry up, reflecting complete market indecision.
A higher close on the following day (preferably with strong volume) would be needed to ascertain that the trend may be in a reversal.

HARAMI CROSS BEARISH PATTERN
Harami Cross Bearish
is a top reversal pattern / bearish reversal pattern.
It could be formed at the end of an uptrend, or during a bounce within a downtrend, or at the resistance.

When the price has been in a rally mode for some time, a two-candle pattern forms.
The body of the 1st candle is the same color as the current trend (should be a long white candle).
The body of the 2nd candle is a doji that is within the body of previous day's candle.

What does this pattern imply?
The buying pressure has been dominating the market for some time. After a long white candle day, on the next day the sellers (bears) suddenly step in and open the price lower than the previous day's close.
After the weak opening, the price fluctuates only in a small range and is contained within the previous day’s body. Subsequently, the price closes at the opening level at the end of the day, forming a Doji. The Doji indicates market indecision and a potential trend reversal. The volume of the doji’s day should also dry up, reflecting complete market indecision.
A confirmation of the reversal on the following day in terms of a lower close (preferably with high volume) would be needed to prove that the trend may be in a reversal.

To read about other Candlestick Patterns, go to: Learning Candlestick Charts.

Related Topics:
* Learning Charts Patterns
* FREE Trading Educational Resources You Should Not Miss

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