Harami Inside Bar

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.