Harami/Inside Bar
This pattern is a two-candlestick pattern in which the first candlestick vertically encompasses the one that follows it. This signal is interpreted in two ways:
1. An indication that an increase in volatility is imminent. This affords traders the opportunity to create trades that speculate not so much on direction,
but rather on an increase in volatility on a breakout in any specific direction.
2. In the context of a trend, a harami/inside bar can be indicative of exhaustion and the onset of a reversal. In this manner, it is similar to long wick patterns
and evening star/morning star patterns examined earlier in this guide.
Note: All three patterns in this series (Pin-bar, Harami and Engulfing) should be traded with a confluence of things like:
1) Support and Resistance
2) Trend lines
3) Fib Retracement levels (50% to 61.8%) golden zone
4) Remember: Pair you trade, Price right now, Session(s) open & Time it is. All of these are highly important in Forex trading.
5) Patterns at pivot points (daily, weekly or monthly)
This pattern is a two-candlestick pattern in which the first candlestick vertically encompasses the one that follows it. This signal is interpreted in two ways:
1. An indication that an increase in volatility is imminent. This affords traders the opportunity to create trades that speculate not so much on direction,
but rather on an increase in volatility on a breakout in any specific direction.
2. In the context of a trend, a harami/inside bar can be indicative of exhaustion and the onset of a reversal. In this manner, it is similar to long wick patterns
and evening star/morning star patterns examined earlier in this guide.
Note: All three patterns in this series (Pin-bar, Harami and Engulfing) should be traded with a confluence of things like:
1) Support and Resistance
2) Trend lines
3) Fib Retracement levels (50% to 61.8%) golden zone
4) Remember: Pair you trade, Price right now, Session(s) open & Time it is. All of these are highly important in Forex trading.
5) Patterns at pivot points (daily, weekly or monthly)