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Harami Black and three Black Crows in Nifty F&O stocks. Can you spot them?

Harami Black and Black Crow are the two major candlestick patterns that can show a reversal in a trend with a fair degree of conviction. With Nifty 50 correcting over 150 points, or 1.25 per cent, on Monday, it has become difficult to list stocks for that are safe-haven trades or even risky bets. Traders can use the two above-mentioned patterns to acertain the stocks where such trend is visible.

Harami Black: The pattern is usually looked as trend reversal in a negative sentiment. A sustained candlestick pattern here may even suggest that the stock good to enter a long position. A bullish harami is a candlestick chart indicator that indicates a bearish trend / phase for a stock may be nearing an end. Some traders may look at a bullish harami as a signal that they should enter a long position.

On the charts, the previous candle is a long-body red candle that indicates weakness. The immediate candlestick is green with an opening price quite higher than previous close. There is a positive reversal if this trend is followed in the next session as well, provided the positive close is supported by decent volumes. That apart, if the other technical indicators such as the RSI, MACD etc also turn, it can safely be assumed that the positive momentum is in place. Click here for the chart


Three Black Crows: It is a trend reversal pattern that is stronger at the top of the trend. Mostly in an uptrend, when you have formation wherein the selling pressure can be visualized on consistent opening prices, then one needs to be cautious as trend me reverse. 

This is exactly opposite of the harami candlestick pattern and a bearish bearish candlestick pattern hints at a reversal of an uptrend. Candlestick charts show the opening, high, low, and the closing price on a particular stock. For stocks moving higher, the candlestick is white or green. When moving lower, they are black or red. Click here for the chart

The black crow pattern includes three red candles with long–body whose opening price is above and modestly in the middle of the previous candles. The red candles close below the low of the previous candle. Often, these signs are correlated with other technical indicators for better confirmation.

The scenario where the opening price is higher than the previous negative close indicates a buying scenario. That said, this strength gets absorbed during the session with a strong negative close even below the previous candle inducing weak sentiment for the scrip.

Here are a few stocks that depict these trends in the Nifty F&O segment


Harami Black and Three Black Crows. Source: Spider Software