Bullish Harami

The Pattern

A Bullish Harami forms over two consecutive bars:

1. A long down-bar continues an existing downtrend.
2. A small up-bar opens above the prior close and closes below the prior open, with its entire body contained inside the prior bar’s body.

The term “harami” is Japanese for “pregnant”, and the visual is named for the small bar nested inside the large prior bar. The shape is essentially a structural mirror of Bullish Engulfing: there, a large up-bar swallows a small down-bar; here, a small up-bar nests inside a large down-bar.

The Story Behind It

Classical analysts treat Harami as a softer reversal signal than Engulfing. The bearish session was strong, but the next session failed to extend it. The inside-bar relationship means buyers did not even test the prior low, let alone reverse the trend. That stalling is the news. Whether the stall becomes a reversal usually depends on what happens over the next few sessions.

In practice, Harami often fires earlier than Engulfing (the bar count to trigger is shorter and the recovery threshold is lower), which means more setups but also more failed signals. The trade-off between signal frequency and reliability is the central thing to test.

When It Tends To Work

• After a sustained, multi-bar downtrend where the lack of follow-through on the inside bar is genuinely notable.
• When the prior down-bar is unusually long. The longer the bar being nested into, the more meaningful the stall.
• In ranging or chop markets where a single failed downside push often marks the actual low. Trending markets are tougher.

When It Tends To Fail

• When the inside-bar relationship is technically met but the inside bar is itself near the prior bar’s low. The pattern reads better when the inside bar prints near the upper half of the prior body.
• In strong trends where the stalling bar is just a one-session pause. The hold exits before any follow-through develops.
• After news-driven down-bars where the next session’s small range is just a digestion bar, not a regime change.

How This Strategy Trades It

Enter long at the close of the inside bar. Hold for hold_bars sessions (default 5), then flatten unconditionally.

What The Backtest Says

Bullish Harami sample runs over 2020-2024 split sharply by market type:

• Nasdaq (NQ): 23 trades, 73.9% win rate, profit factor 3.67, max drawdown 9.7%. Strongly positive.
• S&P 500 (ES): 16 trades, 75.0% win rate, profit factor 2.84, max drawdown 7.6%. Also strongly positive.
• Gold (GC): 13 trades, 53.8% win rate, profit factor 0.82, max drawdown 14.7%. Mildly negative.

The edge holds across equity-index futures. It does not generalize to gold. The classical “bearish momentum stalling” reading lines up with the mean-reverting tendency of equity indices on daily bars, where dip-buying after a small inside bar tends to be rewarded. Gold’s character is different and the pattern doesn’t carry the same signal there.

Related Patterns

• Bearish Harami: the directional mirror.
• Bullish Engulfing: the inverted-size version, large up-bar wraps a small down-bar instead of the other way around.
• Piercing Line: a different two-bar reversal idea, partial body recovery rather than inside-body containment.

Try It Yourself

The default preset uses 1-contract sizing on NQ daily bars. The form lets you change the contract, timeframe, hold length, and contract count.