Trader's Logbook

The Hammer last August 22 didn’t make the price to go up. Today we have another formation that may reverse the trend. The last two candlesticks formed a Harami. Harami Pattern is characterized by a small green real body contained within a prior relatively long red real body. “Harami” is an old Japanese word for “pregnant”. The long red candlestick is “the mother” and the small candlestick is “the baby”. While the market is characterized by downtrend there is heavy selling reflected by a long, red real body however it is followed by a small white body in the next day. This may signal a trend reversal since the second day’s small real body shows that the bearish power is diminishing. The shadows (high/low) of the second candlestick are not necessarily contained within the first body, however it’s preferable if they are.

Caveat!