Harami, Morning Star & Evening Star

The harami is the opposite of the engulfing pattern. Instead of Day 2 engulfing Day 1, here Day 2's real body is contained entirely within Day 1's real body. The word "harami" comes from the Japanese word for "pregnant" — Day 1 is the mother candle, and Day 2 is the small child nestled inside it.

• Day 1: A long candle in the direction of the prevailing trend.
• Day 2: A small candle (of either colour) whose real body fits within Day 1's real body.

The harami signals that the existing trend's momentum is fading. The large Day 1 candle shows strong conviction, but the small Day 2 candle reveals that the momentum has stalled. It is a less aggressive reversal signal compared to the engulfing — think of it as a caution light rather than a stop sign.

The bullish harami forms during a downtrend. Day 1 is a long red candle confirming the selling pressure, but Day 2 is a small blue candle whose body sits entirely within Day 1's body. The sudden contraction in range tells us that sellers are losing their grip and buyers are beginning to absorb the supply.

Real Example — TCS (Tata Consultancy Services)

TCS has been declining from Rs.3,800 to Rs.3,520 over seven sessions. Then this pattern appears:

Day 1's red body spans Rs.3,560 (open) to Rs.3,515 (close) — a range of Rs.45. Day 2's blue body spans Rs.3,525 (open) to Rs.3,545 (close) — a range of just Rs.20, and it fits entirely within Day 1's body boundaries (Rs.3,515 to Rs.3,560). The selling momentum has clearly contracted.

Trade Setup

• Entry: Buy above the high of Day 2 on confirmation (above Rs.3,548).
• Stoploss: The low of the harami pattern — the lower of Day 1 and Day 2 lows (Rs.3,505).
• Risk per share: Rs.3,548 minus Rs.3,505 = Rs.43.

The bearish harami is the mirror image. It forms during an uptrend where Day 1 is a long blue candle and Day 2 is a small red candle contained within Day 1's body. The sudden shrinkage in bullish momentum warns that buying pressure is fading.

Real Example — RELIANCE (Reliance Industries)

RELIANCE has been climbing from Rs.2,400 to Rs.2,580 over eight sessions. At the top, this pattern forms:

Day 1's blue body stretches from Rs.2,545 to Rs.2,582 (Rs.37 range). Day 2's red body goes from Rs.2,575 to Rs.2,558 (Rs.17 range) — fitting well inside Day 1's body. After a day of strong buying, the market could only manage a small, indecisive candle. Over the next five sessions, RELIANCE drifted down to Rs.2,480.

Trade Setup

• Entry: Sell (or exit longs) below the low of Day 2 (below Rs.2,555).
• Stoploss: The high of the harami pattern — the higher of Day 1 and Day 2 highs (Rs.2,590).

The morning star is a three-candle bullish reversal pattern that forms at the bottom of a downtrend. It is one of the most visually distinctive and reliable patterns in candlestick analysis.

Structure

• Day 1: A long red candle that confirms the ongoing downtrend. Sellers are firmly in control.
• Day 2 (the star): A small-bodied candle that gaps down from Day 1's close. The colour does not matter — what matters is the small body, which signals indecision. The momentum has stalled.
• Day 3: A long blue candle that gaps up from Day 2 and closes well into Day 1's body (ideally past the midpoint). Bulls have taken over decisively.

The name comes from the planet Venus (the "morning star") that appears just before sunrise — similarly, this pattern signals that brighter days are ahead for the stock.

Real Example — TATAMOTORS (Tata Motors)

TATAMOTORS has been falling from Rs.680 to Rs.595 over nine sessions. Then the following three-day pattern forms:

Day 1 is a long red candle (body: Rs.608 to Rs.594 = Rs.14). Day 2 opens at Rs.588 with a gap down from Day 1's close of Rs.594, and forms a tiny body (Rs.588 to Rs.591 = Rs.3). Day 3 opens at Rs.598 with a gap up from Day 2's close, and surges to close at Rs.624 — well past the midpoint of Day 1's body. Over the following week, TATAMOTORS continued to Rs.660.

Trade Setup

• Entry: Buy at Day 3's close (Rs.624) once the morning star is confirmed.
• Stoploss: The low of the pattern — the lowest point across all three candles (Rs.584).
• Risk per share: Rs.624 minus Rs.584 = Rs.40.

The evening star is the bearish counterpart of the morning star — a three-candle bearish reversal that forms at the top of an uptrend. Just as the evening star in the sky signals that darkness is approaching, this pattern warns that the rally is ending.

Structure

• Day 1: A long blue candle confirming the uptrend. Bulls are in full control.
• Day 2 (the star): A small-bodied candle that gaps up from Day 1's close. Momentum has stalled at the top.
• Day 3: A long red candle that gaps down from Day 2 and closes well into Day 1's body. Bears have seized control.

Real Example — WIPRO

WIPRO rallies from Rs.420 to Rs.475 over six sessions. At the peak, this three-day pattern appears:

Day 1 is a strong blue candle (body: Rs.462 to Rs.474 = Rs.12). Day 2 gaps up to open at Rs.478 and forms a small body (Rs.478 to Rs.476 = Rs.2) — the star. Day 3 opens at Rs.470, well below Day 2, and closes at Rs.452 — below the midpoint of Day 1's body. WIPRO subsequently fell to Rs.430 over the following sessions.

Trade Setup

• Entry: Sell (or exit longs) at Day 3's close (Rs.452).
• Stoploss: The high of the pattern — the highest point across all three candles (Rs.482).
• Risk per share: Rs.482 minus Rs.452 = Rs.30.

Gaps occur when there is empty space between two candles — no trading activity happened at those price levels. They are important in the context of morning star and evening star patterns because they add significance to the reversal signal.

Types of Gaps

Gaps in Morning & Evening Stars

In a morning star, the ideal formation has a gap down between Day 1 and Day 2 (the star gaps away from the trend) and a gap up between Day 2 and Day 3 (the reversal candle gaps toward the new direction). These gaps represent emotional extremes — panic selling followed by eager buying — and make the pattern more powerful.

Similarly, in an evening star, a gap up between Day 1 and Day 2 followed by a gap down between Day 2 and Day 3 amplifies the bearish signal.