How to draw supply and demand zones for harami pattern?

Zone Drawing for bullish harami and bearish harami

In this lesson we will be focusing on 3rd of the most common candle patterns we see on a base which is Harami

Common candlestick patterns.

• Engulfing patterns
• Piercing patterns (bullish and bearish, the bearish one is known as ‘dark cloud cover’)
• Harami patterns
• Dojis
• Morning Stars and Evening Stars

HARAMIS

Haramis are candlestick patterns in which a large candlestick is followed by a smaller candlestick whose body is located within the vertical range of the larger body. Haramis can be bullish or bearish and can be a sign of a potential reversal of the current trend.

HOW TO USE HARAMIS PATTERNS

• They are the building blocks of a trend
• They usually happen at the end of an uptrend/downtrend
• They can happen at flip zones and previous SR/SD zones that are being revisited.
• Don’t use if pattern is in the middle of nowhere, these patterns are good reversal candlestick patterns but they need to be at bigger timeframe zones for higher probability trading

HARAMIS PATTERN

Harami patterns are similar to the engulfing & Piercing patterns covered in previous episodes, the main difference is that the new candle closes below 50% of the previous candle’s body. Harami is also a reversal pattern. So Zone will be slightly on the right side.

The Bullish and bearish harami Pattern

• Bullish pattern = demand reversal pattern
• Bearish harami = supply reversal pattern

How to draw zone for Bullish and bearish harami Patterns:

• For Demand Zone
  • For distal line – use low of the zone
  • For proximal line – use high of the tightly packed body
• For Supply Zone
  • For distal line – use high of the zone
  • For proximal line – use low of the tightly packed body

Tweaking and extending the proximal/distal lines of a level:

There are times when the proximal and distal lines of a base can be tweaked, for instance when there is a single basing candle (not a wide one) or we have several low volatility candles at the base without long wicks.

Remember you can be flexible as long as you always keep the same risk, the wider the level the smaller the trade size, the narrower the bigger the trade size. Experience will tell you when you should be extending the proximal lines and cover the upper of lower shadows. As long as you use the same risk per trade it will be fine.

Remember that basing will happen in many different shapes, you have up to 6 candles at the base, shorter/longer wicks, multiple candlestick formations, etc. Each base is different and as such it should be treated independently.

To Learn more, watch this video: https://youtu.be/EOAFJbA-XxQ