Change on the Horizon
A bullish harami is part of the very popular and useful family of candlestick charts, a method of analyzing the market that emerged centuries ago from Japanese traders interested in the rice securities. Instead of relying on their own instincts about whether world events would drive the prices of rice up or down, these traders smartly devised a way for visually interpreting opening and closing prices, so that they could be analyzed together over time..
Gradually, this method became part of the technical analysis methodology, a practice that helps to guide the most successful investors in the market today. Technical analysts will spend weeks or even months tracking the behavior of a certain stock. Through the patterns that form over time, like the bullish harami, they are able to make more educated predictions about what that particular stock will do in the future. This information allows them to make wiser decisions about when to buy a certain security, when to hold on to it, and when to sell..
If you were to ask for a definition of this particular chart pattern from a technical analyst, they would tell you that it is a chart pattern in which a large solid colored candlestick is followed by a smaller hollow candlestick whose body is located within the vertical range of the larger body. The bullish harami is considered to be a downtrend black or red candlesticks which eventually engulfs a small hollow candlestick, indicating that a reversal of the previous downward trend is about to begin.