"Harami" means pregnant in Japanese. The second candle is a small baby sitting inside the first candle's body.
Bullish harami
After a decline: a big red candle, then a small green candle inside it. Selling momentum is fading.
Inside bar
The traders' version: the whole second candle (wicks included) sits inside the first candle's range. The first is the mother bar. It shows compression: energy building up for a breakout.
Pro tip
Classic inside-bar play: in an uptrend, buy a break above the mother bar's high with a stop below its low.
Wick says
Inside bars are the market taking a deep breath before shouting. Be ready for the shout.
Key takeaways
- Harami: small body inside the previous body, reversal hint.
- Inside bar: full range inside the mother bar, breakout setup.
- Trade the break in the trend direction.