Containment has a direction in time
04.03.04 measured one thing: whether one body covers another. That measurement says nothing about which came first — and which came first is the whole of this lesson.
A harami is the same containment running the other way: a large body, then a small one sitting entirely inside it. The word is old Japanese for pregnant, which is the picture — a big body carrying a small one.
So engulfing and harami are not two relationships to learn. They are one relationship with two reading directions, and a reader who knows the first already knows the second.
The same two boards, in the other order
Press each. No price changes anywhere; the sessions simply arrive in the opposite sequence.
Eight numbers in total, and all eight are identical in both panels. Only their order differs.
What the reversal costs you
It is worth being precise about what swapped. In the engulfing, the second session was the large one — the most recent thing that happened was decisive. In the harami, the second session is the small one, and the most recent thing that happened was a session that went almost nowhere.
That is why the two carry opposite reputations in the literature, and it is also why both are described there as reversal patterns rather than continuations. Granthara reports the geometry and declines the prediction: a harami records a large session followed by a quiet one that stayed within it, and that is the end of what the four-and-four numbers support.
The engine Granthara checks its own examples with asks for one thing more than pure containment: the inner body must be no more than half the outer one. That is a convention, like every threshold in this Part, and different books draw it differently.
Engulfing and harami are one relationship read in two directions. Learn containment once and you have both.
The cross
Shrink the inner body far enough and it stops being small and becomes effectively nothing: the second session's first and last bids are the same price. A harami whose inner candle is a doji — the strict case from 04.03.01 — is called a harami cross.
It is not a new pattern. It is the same containment with the inner body at its limit, in exactly the way 04.02.03 described the doji as the strict case of a small body.
And as with every family in this chapter, the prior trend supplies the reversal name: after a rise it is read one way, after a fall the other, and inside a flat stretch it is a large session followed by a still one.
- Large board
- ₹29.20 · ₹30.40 · ₹29.10 · ₹30.30
- Small board
- ₹30 · ₹30.10 · ₹29.40 · ₹29.50
- Small first, large second
- bullish engulfing
- Large first, small second
- bearish harami
- Prices changed between the two
- none
A large rising body is followed by a small falling body that sits inside it. The market has been falling for a fortnight. What is on the board?
Which relationship is it?
Containment all the way through, and containment all the way back. The next lesson asks the obvious remaining question: what about the sessions that go part of the way?