Bullish harami

In financial markets, there are signals that indicate a potential trend reversal after a price decline. One such signal appears in the form of two consecutive periods, where the first shows a downward movement, and the second shows the opposite movement with a small body that is completely “contained” within the body of the previous period. This configuration suggests that sellers are losing strength and buyers may start gaining control in the following periods. Detection of this signal involves several logical steps: Analysis of body proportions: The main part of the second period (the body) must be smaller than or not exceed the body of the previous one. This indicates that the new upward movement is weak and occurs within the previous downtrend. Verification of the preceding movement direction: The first period should be bearish, and the second bullish. This sequence indicates a shift in market forces: sellers are losing control, while buyers are starting to dominate. Assessment of internal positioning: The body of the new period must be completely contained within the previous one, meaning that its open and close prices do not exceed the range of the prior candle. This confirms that the potential reversal begins gradually rather than through a sharp jump. Evaluation of shadows: The lengths of the upper and lower shadows are analyzed to avoid extreme fluctuations that could distort the signal. The shadows should remain within certain proportions relative to the body to maintain the configuration’s reliability. Context of the previous trend: The configuration is considered valid only after a defined period of downward movement. Checking the short-term slope of the price helps confirm that the signal appears in a downtrend context rather than during a sideways or upward trend. Effectiveness confirmation: After detecting the signal, the subsequent price movement is evaluated. If the price increases, the signal is confirmed; if not, it is rejected. This helps distinguish real reversal points from random fluctuations. Overall, this configuration highlights short-term market reversals through the relationship between two consecutive periods, verification of the prior trend, and analysis of the following price movement. Such an approach minimizes false signals and provides a systematic way to assess potential trend reversal moments.