Leavitt Brothers: Education - CandleStick Patterns

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	Abandoned Baby
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	Harami
	Harami Cross
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	Separating Lines
	Side by Side White Lines
	Stick Sandwich
	Three Inside Up
	Three Line Strike
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	Three Stars In the South
	Three While Soldiers
	Tri Star
	Unique Three River Bottom
	Upside Gap Three Methods
	Upside Tasuki Gap

Harami

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Pattern: reversal
Reliability: low

Identification
A long black day is followed by a white day which gaps opposite the trend and is completely engulfed by the real body of the first day.

The Psychology
In a downtrend or within a pullback of an uptrend, a long black day occurs. The next day’s gap up comes as a surprise to the shorts who thought they were sitting on a great position the previous day. Reliability of the bullish Harami is low, so a strong following day is needed for confirmation.

The bullish Harami is similar to the bullish Homing Pigeon and could be the first two days of the bullish Three Inside Up pattern.

ACAS made a higher high in late April and that level then became support a few weeks later. A bullish Harami candle formed and the stock never did trade below that level. This is where we like to play Harami candles…at support, not at the end of a downtrend.

ATSI was trading in a bullish triangle pattern and was getting close to decision time because the stock was near the apex of the pattern. The bullish Harami signaled the beginning of the breakout and next leg up.

The bullish Harami that formed here with GMH carried a little more risk because it did not occur at support. But the high volume rally and the lighter volume pullback did present a decent risk/reward setup.

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