A bullish harami is a two-candlestick pattern. The first candle is large & bearish, while the second is smaller & bullish, indicating a potential reversal & weakening of selling pressure.
A bullish engulfing is a two-candlestick pattern where a larger bullish candle fully engulfs a smaller bearish one, indicating strong buyer momentum and a potential reversal.
A small bullish candle forms within a larger bearish candle (Harami) vs. a larger bullish candle completely engulfing a smaller bearish candle (Engulfing).
Formation:
Harami indicates a potential reversal with moderate confirmation, while Engulfing suggests a strong reversal with robust buyer dominance.
Signal Strength:
Harami shows weakening selling pressure and initial signs of buying, whereas Engulfing reflects a strong shift to buyer control and optimism.
Market Sentiment
Harami’s second candle is smaller and doesn’t surpass the first candle's range, while Engulfing’s second candle is larger and fully overtakes the first.
Appearance:
Harami needs additional confirmation (like volume), while Engulfing is often reliable on its own.
Reliability:
Harami appears during the late stages of a downtrend; Engulfing marks a decisive reversal at the end of a downtrend.
Occurrence:
Traders use Harami cautiously with other indicators for confirmation; Engulfing signals quick action due to its strong reversal implication.
Trading Strategy:
Look for two candlesticks: a smaller bullish candle forming within the body of a larger bearish candle, signalling weakening selling pressure.
Look for a larger bullish candle fully engulfing the previous smaller bearish candle during a downtrend, signalling strong buyer momentum.