CDL_CDL_HARAMI (Harami)¶

Overview¶

The Harami is a two-candle reversal pattern that reversal pattern where second candle is contained within first candle. This pattern is used to identify potential trend changes and provides traders with entry signals when combined with proper confirmation.

Parameters¶

Parameter	Type	Default	Description
`open`	Array	Required	Array of opening prices
`high`	Array	Required	Array of high prices
`low`	Array	Required	Array of low prices
`close`	Array	Required	Array of closing prices

Parameter Details¶

Note: Array elements should be ordered from oldest to newest (chronological order)

OHLC Arrays - All four price arrays must have the same length - Minimum 2 candles required for pattern detection - More historical data provides better context for trend analysis

Usage¶

Basic Usage¶

require 'sqa/tai'

open =  [50.0, 49.5, 48.0, 47.5, 48.5]
high =  [50.5, 50.0, 48.5, 48.0, 49.5]
low =   [49.5, 48.5, 47.5, 47.0, 48.0]
close = [49.5, 48.5, 48.0, 47.5, 49.0]

pattern = SQA::TAI.cdl_harami(open, high, low, close)

puts "Harami signal: #{pattern.last}"
# Output: 100 or -100 (pattern detected) or 0 (no pattern)

Understanding the Pattern¶

What It Measures¶

The Harami pattern measures: - Reversal Potential: Shift in market sentiment and momentum - Market Psychology: Momentum slowing, indecision forming, potential trend exhaustion - Trend Exhaustion: Signs that current trend is losing strength

Pattern Characteristics¶

Type: Two-candle reversal
Trend Context: Must appear in trend
Signal: 100 or -100
Reliability: Moderate to High (with confirmation)
Best Timeframes: Daily, 4-hour charts

Trading Signals¶

Entry Signals¶

Primary Entry: Enter when third candle confirms direction

Risk Management: - Stop Loss: Beyond the first candle extreme - Target: Recent swing point - Risk/Reward: Aim for minimum 1:2 ratio

Confirmation Requirements¶

Strengthen the signal with: 1. Volume Confirmation: Increased volume on signal candle 2. Trend Confirmation: Clear trend established 3. Support/Resistance: Pattern at key price level 4. Next Candle: Following candle confirms direction

Best Practices¶

Optimal Use Cases¶

Market Conditions: After established trend with clear momentum
Timeframes: Most reliable on daily charts
Asset Classes: Stocks, forex, commodities
Volatility: Normal volatility environments

Combining with Other Indicators¶

RSI: Confirm overbought/oversold conditions
MACD: Verify momentum shift
Volume: Validate buying/selling pressure
Moving Averages: Confirm trend context

RSI - Momentum confirmation
MACD - Trend and momentum
Volume OBV - Volume confirmation