NISM Certifications · NISM-Series-XV: Research Analyst · Technical Analysis
In candlestick analysis, a long-bodied bullish candle followed by a small bearish candle that opens higher and closes within the first candle's body, appearing after an uptrend, is called what?
The pattern is a bearish harami. A small bearish candle forms inside the body of a preceding large bullish candle after an uptrend, suggesting upward momentum is fading and a reversal may follow, though it needs confirmation from later price action.
- ABearish haramiCorrect
- BBullish engulfing
- CHammer
- DMorning star
Explanation
A bearish harami has a small candle contained within the prior large candle's body, signalling a possible loss of upward momentum. A bullish engulfing pattern is the reverse, where a large candle engulfs the prior small one in a downtrend. A hammer is a single candle, and morning star is a three-candle bullish reversal.
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