The bullish harami candlesticks pattern signals with high probability, a bullish reversal. It is the opposite of bearish harami. In order to be reliable, a downtrend must be in place. We can have any combination of colors in both candlesticks, although the most bullish pattern occurs when they are both green or the first is green and the second is red. The same principles can be applied to the bullish harami cross pattern. Below follows their graphical representation.
After a steep price decline a green long bodied candlestick appears, which is a sign that buyers are coming into play. The second candlestick represents a period of consolidation and indecision among market participants, before the trend finally reverses and becomes an uptrend.
Trading set up using bullish harami
Below we have the daily chart of ETF SPY which represents the S&P 500 stock index. In the circled area we can see a bullish harami which has formed after a short term downtrend. The pattern signals a short term trend reversal. Notice that in this case the harami pattern is formed by two red candlesticks instead of a long green and a small red.
On the same day a bullish harami pattern is formed in T daily chart on a support zone, which signals a longer term uptrend. The stop here should be placed below the lower point of the red candlestick or below the lower point of the support zone.