NeutralReversalIntermediate

Harami

A small real body forms within the prior large real body, signalling contraction.

Professional chart anatomy

Harami

Illustrative example

Context
Range / transitionConfirmation
Break of the two-candle range in the reversal direction.Invalidation
Break in the prior trend direction with follow-through.

Educational chart, not live market data. Real formations vary in symmetry, duration and volatility.

What the market is communicating

Momentum pauses sharply as the second period remains contained within the first body.

Volume behaviour

Often shows reduced participation on the inside candle.

Pro-trader lensDo not evaluate this formation in isolation. Compare relative strength, broader market regime, liquidity, volatility and nearby higher-timeframe levels.

Recognition checklist

Large first candle in trend direction
Smaller second body inside first body
Prior trend exists
Second candle shows contraction
Directional break confirms

Quality improves when

Location is logical

The setup forms near a meaningful support, resistance or trend transition.

Structure is clean

Defining swing points are visible without forcing the label.

Participation confirms

Volume, volatility or relative strength supports the resolution.

Confirmation and trade planning

ConfirmationBreak of the two-candle range in the reversal direction.

InvalidationBreak in the prior trend direction with follow-through.

Target frameworkUse nearby structure and the range boundaries.

Best useIntraday · Swing

Aggressive versus conservative approach

	Aggressive	Conservative
Trigger	Early boundary resolution	Close plus acceptance or retest
Advantage	Better potential entry	More confirmation
Trade-off	Higher false-break risk	May enter later or miss the move

Measured targets are planning references, not forecasts. Position size should be derived from defined account risk and the actual invalidation distance.

Failure modes and trader traps

Confusing body containment with full inside bar
Assuming reversal direction automatically
Ignoring weak context

Looks valid—but may not be

A pattern can satisfy the visual outline yet fail because it forms in the wrong context, lacks sufficient touch points, breaks on weak participation or immediately returns inside the structure. A failed setup is information, not an exception to ignore.

Compare before you classify

Use alternative interpretations to reduce confirmation bias. Similar patterns can imply different behaviour depending on prior trend, boundary slope and confirmation trigger.