In the world of technical analysis, candlestick patterns are vital tools for traders seeking to anticipate market movements. One such pattern, known for signaling potential reversals, is the Harami Cross. Specifically, the Bearish Harami Cross is a strong indicator that a bullish trend may be coming to an end. This blog post will dive deep into understanding, identifying, and trading the Bearish Harami Cross pattern effectively.

What is the Harami Cross (Bearish) Pattern?

The Bearish Harami Cross is a two-candlestick reversal pattern that typically appears at the top of an uptrend. It suggests that the upward momentum is weakening and a possible bearish reversal could occur.

Structure of the Pattern:

  1. First Candle: A large bullish (green or white) candlestick indicating strong buying momentum.
  2. Second Candle: A doji candlestick (where the open and close are nearly the same), completely contained within the body of the first candlestick.

This pattern resembles a pregnant woman (hence the term “Harami” which means “pregnant” in Japanese), where the doji is the “baby” inside the larger bullish candle.

Psychology Behind the Pattern

  • The strong bullish candle shows enthusiasm from buyers.
  • The doji indicates indecision in the market – neither bulls nor bears have control.
  • Since the doji is entirely inside the previous candle’s body, it suggests the momentum is stalling.
  • This shift often precedes a bearish reversal, especially when confirmed with other indicators.

How to Identify the Bearish Harami Cross

Here’s a checklist:

  • The market is in an uptrend.
  • The first candlestick is large and bullish.
  • The second candlestick is a doji that opens and closes within the previous candle’s body.
  • There’s a visible gap down in lower timeframes (optional but increases reliability).

Best Indicators to Confirm the Pattern

Before acting, use other technical tools to confirm:

  1. Volume: Declining volume on the bullish candle and/or spike on the doji enhances reliability.
  2. RSI: If the Relative Strength Index is above 70 (overbought), the reversal has more weight.
  3. MACD: Bearish crossover following the pattern signals confirmation.
  4. Resistance Zones: If the pattern appears near a previous resistance level, its strength increases.

Trading Strategies Using the Bearish Harami Cross

1. Basic Reversal Strategy

Objective: Trade the bearish reversal immediately after confirmation.

Steps:

  • Wait for the Bearish Harami Cross to form.
  • Confirm with volume and indicators.
  • Place a sell order below the low of the doji.
  • Stop Loss: Above the high of the first bullish candle.
  • Target: Risk-reward ratio of 1:2 or next key support level.

Example:
If the first candle closes at ₹220 and the doji forms between ₹218 and ₹219:

  • Sell below ₹218
  • Stop loss at ₹221
  • Target at ₹214 (or next support)

2. Pullback Entry Strategy

Objective: Wait for a minor pullback post-pattern to enter at a better price.

Steps:

  • Spot the Bearish Harami Cross.
  • Wait for a slight retracement back toward resistance (e.g., Fibonacci 38.2% level).
  • Look for bearish confirmation like a shooting star or bearish engulfing.
  • Enter a short trade.
  • Place stop loss above pattern high.

Ideal for: Swing traders looking for higher probability entries.

3. Intraday Scalping Strategy

Objective: Capture small profits in intraday charts using the pattern.

Steps:

  • Use 5 or 15-minute charts.
  • Identify the Bearish Harami Cross during a minor uptrend.
  • Confirm with RSI divergence or MACD.
  • Enter short position on breakdown of the doji candle.
  • Exit after 0.5% to 1% profit.

Caution: Use strict stop-loss and avoid news hours.

4. Multi-Timeframe Confirmation Strategy

Objective: Increase success rate using higher timeframes.

Steps:

  • Identify a Bearish Harami Cross on the daily chart.
  • Switch to hourly or 15-minute chart to find a better entry.
  • Look for a minor double top or trendline break in lower timeframe.
  • Enter short accordingly.

Benefits: Adds confluence and reduces false signals.

5. Combine with Trendline Break Strategy

Objective: Combine with trendline or channel break for additional confirmation.

Steps:

  • Identify the Bearish Harami Cross near an ascending trendline.
  • Wait for the trendline to break after the pattern.
  • Place a sell order on the break.
  • Target: Previous swing lows or next support.

Common Mistakes to Avoid

  1. Ignoring trend context – Always ensure it’s forming after a clear uptrend.
  2. No confirmation – Don’t enter just on pattern alone; look for confirmation.
  3. Overleveraging – Keep your risk under control, especially in volatile markets.
  4. Forcing patterns – Not every doji and bullish candle combo is a Harami Cross.

Real-Life Chart Examples (Recommended)

Although we can’t show live charts here, platforms like TradingView and MetaTrader allow you to spot historical examples of the Bearish Harami Cross. Try searching stocks like:

  • Reliance Industries
  • TCS
  • Apple Inc. (AAPL)
  • Nifty 50 Index

Look for:

  • A prior uptrend
  • The distinct two-candle pattern
  • Follow-up bearish confirmation

Final Thoughts

The Bearish Harami Cross is a powerful reversal pattern when used wisely. It is most effective when paired with proper technical confirmation, risk management, and discipline. Whether you’re a day trader, swing trader, or long-term investor, integrating this candlestick setup into your toolkit can help you anticipate market shifts and improve trade timing.

Pro Tip: Combine candlestick patterns with price action zones, trend analysis, and volume spikes to boost your trading accuracy.