The pattern is a two-candle formation that appears after a rise in price. The first candle shows a relatively long real body, reflecting ongoing upward pressure. The second candle has a small real body that remains within the first candle's range, and its close is inside that range. Together, these features suggest that buying pressure has paused and momentum may be slowing, which can precede a downward move if confirmed.
In practice, traders watch for this pattern on price charts, most often on daily intervals, as a potential signal of a momentum shift. Because the second candle can be neutral or slightly down, the pattern on its own is not definitive; confirmation from later price action—such as a close below the first candle's low or a sequence of lower highs—adds plausibility. Analysts may also consider volume, moving averages, or other indicators before acting, and typically treat this as one piece of a broader technical view rather than a stand-alone signal.
This pattern is part of candlestick chart analysis and is categorized as a reversal-type pattern. It commonly appears after a sustained upward move and is named for the second candle's body being contained within the first's, signaling a pause in upward momentum.
Example: After a steady uptrend, Day 1 forms a long-bodied candle; Day 2 forms a smaller candle whose body is contained within Day 1's range. If Day 3 closes below Day 2's close, observers may view this sequence as a momentum shift signal.
Candlestick chart · Harami pattern · Two-candle pattern · Price action · Reversal pattern · Volume analysis