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Written and copyright © 2008-2010 by Thomas N. Bulkowski. All rights reserved.
In my book,
Encyclopedia of Candlestick Charts  , pictured on the right,
I explore the entire range of candlestick patterns from abandoned babies to windows (not exactly A to Z, but you get the idea), in both bull and bear markets, using almost 5 million candle lines
in the tests.
The book takes an in-depth look at 103 candlestick patterns and reports on behavior and rank (3 types: reversal rate, frequency, and overall performance), identification guidelines,
performance statistics (tables of general statistics, height, and volume), trading tactics (tables of statistics on reversal rates and performance indicators),
and wraps each chapter with a sample trade. I share a sliver of that information below. If you like what you read here, then you will love the book. Help support this website and buy a copy
by clicking on the above link.
The bullish harami cross is another candlestick with good potential, but it acts almost randomly. Just 55% of the time price continues the bearish trend. That is two percentage points
better than the bullish harami. The chief difference between the two candle patterns is that the second day is a doji that fits
inside the prior day. A doji is a candlestick in which the opening and closing prices are within pennies of each other.
After the breakout, the price trend ranks 50, which is mid list out of 103 candle patterns. That suggests the trend does not last long.
Important Results
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Theoretical performance: Bullish reversal
Tested performance: Bearish continuation 55% of the time
Frequency rank: 47
Overall performance rank: 50
Best percentage meeting price target: 74% (bull market, up breakout)
Best average move in 10 days: 4.52% (bear market, up breakout)
Best 10-day performance rank: 36 (bull market, up breakout)
All ranks are out of 103 candlestick patterns with the top performer ranking 1. "Best" means the highest rated of the four combinations of bull/bear market, up/down breakouts.
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 Bullish Harami Cross
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Discussion
As with many candle patterns that I tested, theory disagrees with reality. The bullish harami cross is no exception. It is supposed to act as a bullish reversal of the downward price trend,
but price continues falling 55% of the time. That is what I consider "near random." In other words, the candlestick offers no help in determining the breakout direction.
The best percentage move 10 days after the breakout is a rise of 4.52% in a bear market. I consider moves of more than 6% to be good, so the post breakout trend is weak.
Identification Guidelines
| Characteristic | Discussion |
| Number of candle lines | Two. |
| Price trend leading to the pattern | Downward. |
| Configuration | Look for a two candle pattern in a downward price trend. The first line is a tall black candle followed by a doji that fits within the high-low price range of the prior day. |
Three Trading Tidbits
If you want a few bones from my Encyclopedia of candlestick charts book, here are three to chew on. The pages refer to the book
where the tips appear.
- Bullish harami cross candles that appear within a third of the yearly low perform best -- page 403.
- Select tall candles -- page 404.
- Bullish harami cross patterns that appear within a third of the yearly low tend to act as continuations -- page 406.
Example
The chart shows a bullish harami cross (circled in red) in a downward price trend on the daily chart. The downtrend meanders lower instead of the
straight-line runs that I like to see. The breakout from this candle pattern is upward when price closes above the top of the bullish harami cross. That takes about two weeks to happen,
but happen it does. The uptrend is short lived, though, as the chart shows. Since the primary trend before the pattern began was downward, the price trend resumes falling during
the trading doldrums of August.
-- Thomas Bulkowski
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