Know your Harami from your 'Hai'rami

ACCICB bought many stocks on a harami candlestick only to discover that it is actually a 'hai'rami when the stock went down further. Hai in mandarin means to inflict woe onto others thus you can see why I renamed the harami to 'hai'rami for ACCICB.

Harami is a two Japanese candlestick pattern and it is a reversal pattern thus you can imagine ACCICB's reaction when he bought it on the downtrend but it went southwards or sideways instead of going up up and away. I won't go into the details of the harami pattern because there's much information out there so I shouldn't be singing the same tune.

The best way to get better at TA is through practice I would say although some people I know may have a gift for TA. Its like they can see things that we can't! Especially with variations of harami patterns occurring in charts, it becomes an art to differentiate your harami from your 'hai'rami. 

When I first started out on TA, I realised that if you got tricked by a 'hai'rami such as in ACCICB's case, you could get stuck for a long time. One way could be to buy when indecision is solved via a close above the highs of the harami pattern. This could mean waiting for the next day's candlestick rather than just buying once the harami pattern has been formed.

You can imagine how many times ACCICB talks about the 'hai'rami as the harami doesn't preclude the possibility that market would resume its downward course as it simply relays a condition about the market that at the time of harami, downward pressure had subsided. However the harami could be a signal that the prior intra-day trend might be over and could be used to cover shorts.

I've yet to buy or sell on a variation of a harami but with a classic harami pattern and with other indicators that are in favor, you can pretty much be certain about the positive benefits of the harami pattern. 

Comments

  1. Singapore Man of LeisureJuly 2, 2015 at 3:35 PM

    LOL!

    If technical analysis can be "bao jiak" like durians, there will be no market.

    Who will take the opposite side of our trades? Fundamental traders?

    Wouldn't it be ironic if when we are buying, those selling to us are also using the same technical voodoo as us!?

    Now that's something to think about!

    ReplyDelete
    Replies
    1. Joyce LeongJuly 2, 2015 at 4:45 PM

      I guess ACCICB was contributing to the other side by buying on 'hai'rami! The only certainties in life are death and taxes so where can always make $$$ through the market!

      Delete

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