Question: What is the proper strategy when Harami pattern appears in Candlestick chart?
Here is an example of strategy when you see the appearance of a Harami pattern filtered by RSI at the overbought area, during the course of a rally.
Consider selling when the next candle falls below the low price of the pattern.
Consider placing a protective stop loss at the top of the Harami pattern.
Take Profit strategy is heavily dependent on the trading profile of each individual:
- Close the position when the price reaches the SMA(50).
- Close 50% of the position when price travels 100% the length of the Harami pattern then close the remaining 50% when price reaches the SMA(50).
- Other combinations may be applied.