I've noticed that many beginners in technical analysis overlook a useful pattern called harami. It is one of those Japanese candlestick patterns that can give an early signal of a trend reversal if recognized correctly.

Harami translates to "pregnant" — the name is quite figurative because the second candle appears to be inside the body of the first, creating a distinctive visual pattern. The essence of the model is that after a strong movement (a large first candle), a small candle appears that is completely contained within the range of the previous candle's body. This reflects a weakening of the trend and a potential reversal.

There are two types of harami. If, after a decline, a small green candle appears following a red one — this is a bullish harami, signaling a probable reversal upward. The opposite situation, when after an upward move a small red candle appears — this is a bearish harami, indicating a possible decline.

In trading, I recommend not relying solely on the harami. It's better to combine it with confirming indicators — for example, look at trading volume or RSI. When a harami forms at important support or resistance levels, the reliability of the signal significantly increases. This turns the pattern from just an interesting observation into a truly useful tool for identifying entry points.