Bybit Arbitrage is a trading tool that simplifies arbitrage trading by capitalizing on funding rate and price differences.

If you're seeking consistent returns with minimal risk, Bybit Arbitrage is the perfect ally.

 This robust tool empowers you to generate regular profits with minimal risks by capitalizing on price disparities across different markets. Its user-friendly interface lets you easily spot and exploit these differences, so that you can execute flawless arbitrage trading in the crypto market with confidence. Read on to learn how Bybit Arbitrage makes arbitrage trading an effortless way for you to achieve low-risk gains.

 is the buying and selling of the same or similar asset(s) at the same time across different markets to earn from slight price deviations. This act of purchasing an asset at a fixed price — while simultaneously selling it at a higher price — allows a trader to instantly make profits without any risks. 

While arbitrage trading has long been a staple in traditional financial markets, such as stock and forex, the advent of crypto trading has propelled arbitrage trading to new heights — thanks to the heightened volatility of the crypto market. Additionally, unlike traditional stock markets, crypto markets are traded 24/7, offering more opportunities for arbitrage traders to reap profits from the price gaps across exchanges and markets. 

 across exchanges or within a single exchange. Keep in mind that if you opt to arbitrage trade across different platforms, accessing your profits may prove to be complex, due to the need to transfer your assets between the exchanges, which can take up to several days to complete. On the other hand, arbitrage trading on a single platform is more straightforward — but more competitive as well.

There are multiple arbitrage trading strategies, but the most common ones in the crypto market include funding rates arbitrage, spot-futures arbitrage and futures arbitrage. 

Funding rates arbitrage allows traders to profit from variations in funding rates between 

 contracts. In contrast, spot-futures arbitrage enables traders to profit from price disparities between the spot and 

 for the same asset. Meanwhile, futures arbitrage involves profiting from price discrepancies between futures contracts with different expiration dates.

Bybit Arbitrage is a trading tool that helps traders identify arbitrage trading opportunities in two ways: funding rate and spread. 

The user-friendly interface organizes trading pairs based on either funding rates or spreads in different markets, so that traders can easily spot disparities in funding rate or price across the markets at a glance. 

Bybit Arbitrage is exclusively available to 

 mode. It facilitates arbitrage trading for USDT Perpetual, USDC Perpetual and USDC Futures contracts, thereby allowing you to enjoy arbitrage trading opportunities between USDT 

Spot pairs and USDT Perpetual pairs, or USDC Spot pairs and USDC Perpetual/Futures pairs. 

The Funding Rate Arbitrage feature exploits differences in funding rates between the Spot and Perpetual/Futures markets on the Bybit exchange. With the Funding Rate feature, traders can earn funding fees while simultaneously managing their positions in order to minimize potential losses and maximize gains through positive and negative arbitrage strategies.

Funding rates for the different trading pairs are listed in descending order. This helps traders to easily leverage the interest rate differential between Spot and Perpetual/Futures contracts.

The Funding Rate feature also allows you to 

 orders (with the same amount, but in different directions) in both Spot and Perpetual/Futures, which enables you to earn funding fees while mitigating potential losses (with potential gains).

holders in Futures/Perpetual contracts pay short position holders. You can leverage this situation by executing a positive arbitrage, which involves

 buying a Spot pair and taking a short position in 

Perpetual to earn steady funding fees. Alternatively, if the funding fee is negative, short position holders pay long position holders. In this case, you would perform a negative arbitrage by shorting a Spot pair and going long in a 

The Spread Arbitrage feature helps traders capitalize on price discrepancies between different markets for the same cryptocurrency asset. With this feature, you can easily compare the market prices of an asset traded across various trading pairs and contracts. While Spread Arbitrage may be similar to spot-futures arbitrage, it offers more arbitrage opportunities since it covers a broader range of markets, unlike spot-futures arbitrage, which targets specific markets

With Spread Arbitrage, the aim is to profit from the eventual price convergence as you buy the crypto asset at a lower price in one market (e.g., Spot) and sell it at a higher price in another market (e.g., Futures). 

As the futures price will eventually align with the Spot price when the contract expires, you’ll be able to take advantage of the simultaneous price disparity for the same asset.

In order to trade with Bybit Arbitrage, you’ll first need to 

. Currently, Bybit Arbitrage is exclusively accessible via the 

 for the web version, which will be launched soon!

Bybit Arbitrage offers multiple advantages.

Bybit Arbitrage is a powerful tool for traders seeking low-risk gains in the volatile crypto market. With its intuitive interface and exclusive features, traders can effectively leverage funding rate and price differences to maximize profits while minimizing risks. Bybit Arbitrage offers diverse benefits that make arbitrage trading more accessible and profitable than ever before.

Beginner

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How to Use Bybit Arbitrage to Achieve Funding Rate and Price Difference Arbitrage

An Ethereum Spot ETF is an exchange-traded fund that tracks the real-time price of Ether and allows investment through traditional stock markets. Learn more.

Earlier this year, the U.S. Securities and Exchange Commission (SEC) gave the green light to a number of Bitcoin Spot exchange-traded funds (

), sparking optimism that similar approval might be extended to Ethereum Spot ETFs. Adding to the excitement, news of Ethereum Spot ETF approval in Asia’s first region has heightened anticipation for a potential approval and launch in the U.S. However, despite the buzz, some industry observers remain skeptical. This article explores the potential impact of Ethereum Spot ETF approval on the broader crypto market.

An Ethereum Spot ETF is an exchange-traded fund that tracks the real-time price of 

 and allows investment through traditional stock markets. It offers investors a way to invest in Ether without having to actually buy or hold the asset itself.

An Ethereum Spot ETF operates by pooling investor funds to purchase Ether, which is held in reserves by the ETF.

Rather than navigating the complexities of 

 and exchanges, investors buy shares of the ETF through regular brokerage accounts, just as they would with traditional stocks. These shares represent a stake in the Ether held by the ETF, providing a simple and regulated way to own Ethereum indirectly.

In order to create ETF shares, authorized participants — usually financial institutions — purchase Ether in exchange for ETF shares of equal value, which are then sold onto the market. An authorized participant can also redeem shares by buying enough ETF shares and exchanging them for Spot Ether and taking those shares away from the market.

As a result, the price of ETF shares tends to fluctuate in line with Ethereum's Spot market price. If it didn’t, there would be an 

 opportunity to profit from any mispricings in the ETF price. However, it’s still theoretically possible for the ETF to trade at different prices simply because of supply-and-demand factors.

ETFs as securities are regulated by the SEC, so an Ethereum Spot ETF provides a regulated product that investors can purchase. By contrast, Spot Ether is being investigated by the SEC to determine whether it should be classified as a security, and currently lacks regulatory clarity. 

This setup offers numerous benefits for investors. It simplifies the investment process, allowing anyone with a brokerage account to invest in Ethereum without setting up a crypto exchange account or managing storage. This can save time and give some investors greater peace of mind. An ETF structure also provides the regulatory clarity that institutional investors need, which can enhance liquidity and trading volumes.

Security is paramount in the realm of cryptocurrency, and the ETF provider takes it seriously. To safeguard Ether holdings, ETF providers employ a combination of 

 and insured custodial services. As a result, they could potentially minimize the risk of theft or loss that individual crypto investors may encounter.

The Ethereum Spot ETF bridges traditional finance (TradFi) and the exciting (but still growing) cryptocurrency space. It offers the security and ease of trading associated with traditional financial markets while opening up investment opportunities in Ethereum for a broader audience.

Both excitement and regulatory scrutiny characterize the current landscape of Ethereum Spot ETFs. Major financial institutions like 

 and Fidelity have submitted applications for these ETFs to the SEC. Still, decisions have been delayed, with the next 

If applicants begin updating their filings by April, this may indicate they’re incorporating feedback from the regulator, which could be interpreted as a positive sign. However, a lack of updates to filings could indicate that the SEC isn’t maintaining the same level of discussions with issuers that led to its 

Another challenge is that the SEC is still investigating whether Ether should be classified as a security, especially since it transferred its consensus mechanism to 

. Earning rewards through staking could meet criteria that determine whether an asset is a security. Ethereum also provides a foundation for 

 (DeFi), which could add to the complexity of the review. 

Analysts' opinions vary regarding the likelihood of ETH ETF approval. One Bloomberg analyst, for instance, 

 chance of approval by May. However, the SEC's recent silence might hint at a less favorable outcome.

The approval of Ethereum Spot ETFs is eagerly awaited because it could mirror the impact of Bitcoin Spot ETF approval, which led to an influx of capital in the market. It would mark a pivotal milestone, likely to attract increased investment and further validate cryptocurrency. The crypto community is closely monitoring these developments, as the coming months will be crucial in shaping the future of Ethereum investment opportunities.

 was recently given to the first Spot Bitcoin and Ethereum ETFs in one of the Asian regions. This landmark decision positions the city as a trailblazer in the Asian financial landscape, embracing the integration of popular cryptocurrencies into mainstream investment avenues.

This milestone has sparked excitement within the crypto community, indicating a positive reception toward digital assets in that region. Analysts believe this move could set a precedent for other jurisdictions to follow, potentially leading to broader acceptance and recognition of cryptocurrencies as a legitimate asset class.

These newly approved ETFs are expected to attract a wave of fresh investors — both retail and institutional — by offering a regulated and familiar investment option for exposure to cryptocurrencies. This growth of interest could increase stability in the crypto markets, possibly influencing the price movements of Bitcoin and Ethereum in the region.

The timing of this approval is noteworthy, considering that the U.S. could also be on the cusp of approval of an Ethereum Spot ETF. If this proactive approach inspires other financial centers beyond the U.S. to consider similar approvals, it will palpably contribute to the global expansion and maturation of the cryptocurrency market.

Current Impact of Ethereum Spot ETF Applications on the Crypto Market

The buzz surrounding Ethereum Spot ETF applications is noticeably affecting the crypto market, particularly Ethereum's price and overall sentiment. Submission of new ETF applications to the SEC has coincided with an 

, pushing it to around $3,700. This uptick reflects the market's optimism and positive sentiment regarding the potential for easier access to Ethereum. However, the market has exhibited some volatility as well, with Ether dropping over 14% in a week in early April. 

Despite these fluctuations, there's a general expectation that ETF developments would significantly impact Ethereum's price dynamics, similar to what was observed with the recent Bitcoin Spot ETF approvals. Moreover, the recent approval of cryptocurrency ETFs has further fueled optimism and positive expectations for increased investment inflows and a broader recognition of cryptocurrencies.

To sum up, the current impact of Ethereum Spot ETF applications on the crypto market is marked by heightened anticipation along with some volatility. Ethereum's price is responding to changes in the regulatory landscape and the potential for broader adoption of cryptocurrency-based investment products.

What Will It Mean if an Ethereum Spot ETF Application Is Approved?

The approval of an Ethereum Spot ETF application by the SEC would mark a significant milestone for the cryptocurrency market, especially for Ethereum. Following are some of the potential benefits.

Drawing parallels to the earlier Bitcoin Spot ETF approvals, some pundits expect an initial surge in Ethereum's price following the expected announcement, reflecting renewed confidence and interest in Ether as an asset. Over the long term, Ethereum Spot ETFs could contribute to growth and stability, similar to the impact that Bitcoin Spot ETFs have had on BTC’s price.

However, there are key differences to consider. The SEC's cautious stance on Ethereum — notably because of its PoS consensus mechanism — could influence the approval process and subsequent market reactions. In addition, Ethereum's unique ecosystem, including its role in DeFi and 

, could lead to different market responses as compared to those following the Bitcoin Spot ETF approvals.

The potential approval of Ethereum Spot ETFs is a crucial turning point for the crypto market, promising easier access, increased investment and greater legitimacy. Although short-term price fluctuations may occur, the long-term effects could echo the positive growth recently witnessed with Bitcoin Spot ETFs, promoting a more mature investment environment for Ethereum.

Intermediate

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Ethereum Spot ETF Approval: Its Impact on Crypto Markets

Grayscale Investments has filed a registration statement on Form S-3 with the SEC to register shares of its Grayscale Ethereum Trust (ETHE) as part of efforts to uplist the trust to a spot Ethereum ETF on the NYSE Arca.

Daily Top Performer — Automata Network (ATA)

The SPX index is up 0.02%, investor focus on earnings and U.S. interest rates continues. The broader cryptocurrency market is down, with Bitcoin and Ether dropping by 3.78% and 2.41%, respectively in the past 24 hours.

Today’s outperformer is ATA, which jumped 8.9% after Automata launched Multi-Prover AVS on Eigenlayer Holesky Testnet to boost decentralized security.

Automata Network (ATA), founded in 2019, is a Web3 platform providing private web services for decentralized applications, focusing on secure, anonymous transactions and governance. Key features include a private voting system and MEV minimization to enhance user privacy and security. Automata's Multi-Prover AVS, which utilizes TEE Coprocessors to enhance security, is now available on the Eigenlayer Holesky testnet. This system employs the TEE Prover as a secondary security measure in decentralized systems. Operators, restakers, and developers are encouraged to learn more about this advancement on their website.

Check Out the Latest Prices, Charts, and Data of 

Grayscale Investments, the world's largest crypto asset manager, has filed a registration statement on Form S-3 with the SEC to register shares of its Grayscale Ethereum Trust (ETHE) as part of efforts to uplist the trust to a spot Ethereum ETF on the NYSE Arca. This filing follows NYSE Arca’s application and is a crucial step in the regulatory process required for offering shares continuously upon approval. The shares will not be sold until the registration is declared effective, and this offering is subject to the Securities Act of 1933. Grayscale emphasizes that the trust, not registered under the 1940 Act, involves high risk and volatility, is focused solely on Ethereum, and does not offer direct investment in Ethereum.

BlackRock's spot bitcoin ETF, IBIT, has significantly impacted the firm's overall ETF flows, comprising 24% of its total. Eric Balchunas, Bloomberg's Senior ETF Analyst, highlighted the fund's success during a panel on Hong Kong's newly approved spot crypto ETFs. Since its launch in January, IBIT has attracted consistent inflows for over 70 days, accumulating more than $18 billion in assets under management and becoming one of the most successful ETFs in history. The IBIT fund is second only to Grayscale's ETF in terms of assets but has seen remarkable trading volume along with other spot bitcoin ETFs, totaling nearly $230 billion.

Gamium, supported by Parachain Ventures, DAO Maker, and Mr. Beast among others, has its token $GMM listed on major exchanges with a fully diluted valuation of around $43M. The platform is promoting a beta points airdrop to reward early users, where participants can sign up and earn points through various activities like launching an MST, trading, daily logins, and referrals. Details on point earning and distribution are available in a dedicated blog post. However, potential users are cautioned to research due to the inherent risks associated with DeFi protocols and trading.

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Grayscale Files for SEC Registration to Convert Ethereum Trust into a Spot ETF on NYSE Arca

Sharky is a Solana-based lending and borrowing DeFi solution that utilizes NFTs as loan collateral.

Cryptocurrency lending and borrowing has always been a prominent niche of the decentralized finance (

) industry, championed by platforms like Aave (

). A much rarer variant of DeFi borrowing and lending is based on non-fungible tokens (

Sharky.fi, or simply Sharky, is a Solana-based lending and borrowing protocol that uses NFTs as collateral to facilitate the DeFi processes on the network. By putting up NFTs as collateral, users can borrow funds via short-term loans in Solana's native SOL tokens. For lenders, the platform is also a great way to earn high APY rates in just 7 to 14 days, while having their loaned funds protected by the NFTs.

Having established itself as the leader of NFT-based lending and borrowing on Solana, the Sharky project has ambitious plans to integrate two more highly popular crypto asset types — Ordinals and real-world assets (RWAs).

 (SHARK) is a lending and borrowing app on the 

 (SOL) blockchain that lets users provide NFTs as collateral to access short-term loans in SOL tokens.

 Lenders can view NFTs offered as collateral, and make loan offers secured by their preferred NFTs.

Although Sharky's public launch on the Solana mainnet dates back to April 2022, the platform operated without its 

, SHARK, for its first two years in the market. The SHARK token was eventually launched in mid-April 2024.

Using its innovative business concept, Sharky quickly established itself as the leader of NFT lending. According to the project’s team, Sharky has a 90% share of the NFT lending market on Solana and has issued more than 1.4 million NFT loans.

Following the recent launch of its SHARK token, the project aims to integrate additional crypto asset types in the future. These include 

 (RWAs). Another ambitious product type considered for future implementation on the platform is uncollateralized consumer loans.

As a lender on Sharky.fi, you can browse NFTs from a variety of collections offered on the platform and make a loan offer for potential borrowers. The collections available on Sharky include the platform's own 

 collection, Mad Labs, Solana Monkey Business (SMB), Tensorians, Namaste and more. Lenders’ offers are shown to potential borrowers on the platform, who then choose the best offer based on their borrowing needs.

The NFT provided by the borrower is used as collateral, and the lender makes their funds available in SOL tokens. Lenders earn interest on the funds, with the loan duration typically between 7 and 14 days. Interest rates, naturally, will vary depending upon on-platform activity. Usually, 

 for active loans range between 120% and 220%, though they can go up to 360%. As such, Sharky loans are an excellent way for lenders to earn some serious interest quickly. If a borrower fails to repay the loan in full, the NFT used as collateral is transferred to the lender.

For borrowers, the Sharky platform is an excellent opportunity to access SOL funds for short-term needs quickly and flexibly using their NFTs, rather than cryptocurrency, as collateral. The best part of the platform's borrowing mechanism is that you remain in possession of your NFT during the loan period as a borrower. While your NFT is used as collateral, its ownership isn't transferred to the lender while the loan is active. The ownership transfer may only happen at the end of the loan period if you fail to repay the loan in full.

Maintaining the ownership of your NFT allows you to keep using it on various DeFi and other apps for purposes such as staking or satisfying 

 eligibility requirements, among other potential uses.

Sharx is the platform's own NFT collection. One of the most popular collections used in Sharky's lending and borrowing operations, sharx is made up of 10,111 adorable shark characters. Purchasing a sharx NFT not only opens up borrowing opportunities but also entitles you to upgrade or boost your Chowder points, rewards that are used in Sharky's loyalty program. 

As a sharx holder, you're entitled to the airdrop of Sharky.fi’s governance token, SHARK, and you can also stake sharx to earn FISHY tokens.

The newly launched SHARK token is envisioned as the platform's governance asset, with a total supply of 100 million. As of the time of writing in late April 2024, only some specific details on the actual governance processes powered by SHARK are available. Thus, the token's actual use in on-platform governance is expected to be outlined in the future.

SHARK will be airdropped in two phases, with 4.25% set aside for the first phase and 3.5% for the second. Of the former, 70% is allocated to its community, with the remaining 30% is distributed to partner communities. Meanwhile, the second phase is held as a staking pool event with a lockup duration of 30 to 60 days exclusively for OG, new users and sharx holders.

 of Sharky. Unlike the brand-new SHARK token, FISHY was issued back in 2022 at the start of the platform's operations. FISHY can be earned by staking sharx NFTs, accumulating reward points and participating in Sharky's social media campaigns. The token can be used to boost sharx NFTs, which in turn can earn you additional Chowder points. FISHY also gives you access to NFT raffles and auctions held on Sharky.

The SHARK token can be bought on Bybit through a Spot pair with USDT (

). Additionally, you can also take part in Bybit's current campaigns for the token for the chance to grab a share of the 

, which includes a Token Splash event featuring 456,000 SHARK through Apr 30, 2024, 9AM UTC, and a Lucky Draw with 58,000 SHARK in rewards through Apr 30, 2024, 9:59AM UTC.

Lending and borrowing using NFTs as collateral is a novel concept that has earned Sharky leadership positions in this niche. As more platforms adopting this business model emerge, the competition in the field is likely to intensify. However, as of now, Sharky remains the absolute leader of the Solana-based NFT lending and borrowing market. 

As NFTs experience a resurgence in popularity following the post-2021 dip, DeFi solutions that make innovative use of these assets, such as Sharky, stand to benefit. Later in 2024 and beyond, we’ll likely hear more about NFTs being used as legitimate collateral in crypto finance — a new trend helped to no small degree by the Sharky platform.

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Sharky.fi (SHARK): The Decentralized Platform for Instant NFT Loans

Candlestick

Trading

The Harami candlestick formation is used to signal traders a trend reversal is approaching. Not only is it easy to be spotted, but it also yields a good risk-to-reward ratio. Learn more.

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The Harami candle is a Japanese candlestick formation that can signal trend reversals, offering crypto traders a good 

 trade setup. The pattern is created with two candles, a very tall candle followed by a substantially shorter candle.

Harami patterns can be found in any time frame. The process of trading them is fairly straightforward once you’re comfortable identifying them.

The Harami candlestick formation is a reversal pattern consisting of two candles. The first is a tall candle continuing a trend, and the second candle is significantly shorter, of an opposite color, signaling a reversal of the trend. The first candle’s body must completely engulf the second candle’s body.

The Harami is a Japanese candlestick pattern that is extremely popular among crypto traders. It’s easy to spot and gives traders a relatively tight risk range. As a result, the Harami pattern tends to yield a good risk-to-reward ratio when trading it.

“Harami” is a Japanese word meaning “pregnant.” That image makes it easier to grasp what the Harami chart pattern suggests. Just like a pregnant woman giving birth to a new baby, the Harami pattern gives birth to a new trend. Some analysts might say the shape of the pattern resembles a pregnant woman, too.

There are two types of Harami patterns: bullish and bearish.

Interpreting the Bearish Harami Candlestick Pattern

A bearish Harami occurs at the top of an uptrend. The pattern starts with a large, bullish green candle, followed by a smaller bearish or red candle.

A key component to the bearish Harami pattern is that the second candle must gap lower, in order to signal the prior uptrend has weakened. Within the crypto market, trading is continuous — 24 hours per day, 7 days per week. Therefore, it’s sporadic to see a gap up or down in crypto.

Knowing this, look for the second bearish candle to open — and then immediately sell-off. The body of the first candle needs to engulf the body of the second one completely. This is key to the Harami pattern, as prices are so weak that they can’t revert to a bullish momentum to the previous high, signaling uncertainty and a potential trend change.

Interpreting the Bullish Harami Candlestick Pattern

The bullish Harami candle pattern is the opposite of the bearish Harami and is found at the end of a downtrend. The first candle of the pattern is a large, bearish (red) candle. Then, prices gap higher on the next candle, substantially smaller and bullish green candle.

Within cryptocurrency markets, there likely isn’t going to be a gap higher. As a result, the bullish move will occur immediately after the close of the first candle. It’s important for the body of the second candle, the bullish green candle, to be completely engulfed by the body of the first red candle.

The bullish Harami hints that the trend is shifting from down to up.

The Harami is a two candlestick pattern. The first candlestick is quite tall in size. The second candlestick is substantially smaller. The body of the second candle must be contained or engulfed within the body of the first candle. Ideally, you want to see the second candle at less than half the size of the first candle.

This is where the image of a pregnant woman makes sense: she would be the first (tall) candle, and her baby is the second smaller candle embodied within the first.

An important distinction is where the second candle needs to gap on the open in the opposite direction of the first candle. Within crypto, gaps are rare, so that the patterns will look slightly different.

For example, above we see a bullish Harami develop on the 4-hour chart for LINK. In this chart, LINK is in a downtrend that corrects lower by about 30%. Then, a larger-than-normal bearish candle forms, followed by a small green candle. These two candles together create the bullish Harami. At that point, a new uptrend kicks off and LINK rallies over 40%

Identifying Bullish and Bearish Harami on a Trading Chart

Now that you’re familiar with the shape and structure of the Harami, it’s critically important to understand where you’ll find this pattern within the cryptocurrency market.

Bullish Harami patterns are the kickoff to new bull trends, just as we see in the Ethereum chart, above. Therefore, you only find them after a downtrend. After a series of lower highs and lower lows, the bullish Harami pattern starts with another big, bearish candle. This suggests the downtrend has accelerated and is possibly capitulating.

As the candle exhausts, a quick rally begins but stalls. In essence, the sellers are depleted, but the buyers haven’t shown up yet. This carves the second candle of the pattern, which is smaller and is encompassed by the body of the first candle.

The pattern is confirmed when the market continues to rally while holding above the recent low.

The opposite is true for a bearish Harami formation.

The bearish Harami is the kickoff to a new bear trend. Thus, it is seen only at the end of an uptrend. As the trend rallies higher, such as in the XRPUSD chart above, the Harami starts with a large green candle, which is visible as a blow-off to a mature trend. Unable to extend any further, the price begins to fall as the second candle’s high holds below the close of the first candle.

No significant progress is made to the downside, and the second candle’s body is engulfed by that of the first candle. This price behavior suggests the market is so weak that it cannot rally back to new highs.

Absent new buyers, the price falls further, beginning a new downtrend.

Some Japanese candlestick patterns have similarities and may be difficult to distinguish from one another. For example, the Harami Cross candle is a specific type of Harami pattern. It has some similarities to the 

, but there are some differences in using the two.

First of all, the Harami Cross is a combination of the Harami pattern and a star doji.

The second candle of the Harami Cross is a star doji that looks like a plus sign. The same principle applies: the plus sign must be engulfed within the body of the first candle.

The doji candlestick pattern has some similarities to the Harami Cross. The most obvious similarity is that a star doji is one of the five different types of doji patterns. A specific type of doji is being inserted into the second candle of the Harami Cross.

However, the doji pattern is a one-candlestick pattern, while the Harami Cross is a two-candle pattern. The doji by itself is trendless. The doji pattern implies indecision, and we aren’t certain what the next trend will be.

On the other hand, the Harami Cross is at the forefront of a trend reversal. So coupling the star doji with the large candlestick of the Harami yields a specific pattern that suggests the trend is about to reverse.

Some benefits of trading the Harami pattern include the powerful signals it generates. These patterns are easy to spot, which can yield strong risk-to-reward opportunities. Below you’ll find a step-by-step process to identify and trade both types of Harami patterns.

During the first part of 2021, Bitcoin was on a tear to the upside. There were periods of brief dips, which merely provided consolidation zones to launch the next rally. 

One consolidation zone ended with a bullish Harami pattern. Let’s inspect this setup more closely. 

In January 2021, Bitcoin started to consolidate its recent gains and was trending lower in a correction. A downtrend is the first step in creating an environment ripe for a bullish Harami (1).

January 21, the largest down day for Bitcoin, suggests that traders may be capitulating and a bottom may soon form. This large red candle becomes the first of the two candles in the Harami pattern (2).

Sure enough, the next day sees Bitcoin mildly pressing lower, but ending the day at a higher price. The body of this second candle is engulfed by the body of the first candle (3). This helps set up the bullish trading opportunity.

The stop loss should be set just below the Harami low point. In this case, there was a recent swing low just below this same price zone. Therefore, it would be prudent to set the 

 just below all of those low points near $27,480 (4).

Then, we calculate the distance between the entry point and the stop loss. In this case, the difference is $6,320. We want to double that distance and it becomes $12,640.

Add the new doubled amount to the entry price to calculate a take profit level. $33,800 + $12,640 yields a take profit level of $46,440 (5).

After a couple of candles, the long trade entry into Bitcoin is triggered. Then, the trader waits for the target or the stop loss to be hit. Prices come close but never hit the stop loss level, and eventually rally to reach the target.

Using Bitcoin’s daily chart as an example, in March 2021, the biggest cryptocurrency was rallying to new all-time highs. This rally had become quite strong and extended. In the chart below, symptoms of a top begin to emerge when a large green candle shoots up. This green candle will need to be larger than most other candles on the chart at that time.

Bitcoin is in rally mode, and in a clear uptrend (I). As the rally stretches to new highs on 13 March, as represented by the long green candlestick (first candle of Harami) indicating the buying pressure is strong in the recent trend.

The opening of the next candle begins a downward correction that stops about halfway through the first candle. This red bearish candle becomes the second candle of the Harami pattern (III).  

 Now, the trader waits for the low of the second candle to be broken to signal a bearish entry into the position (IV). The stop loss is placed just above the Harami pattern high (V). The target is at least twice the distance from the entry to the stop loss (VI).

Bitcoin’s price reaches the target within a couple of weeks without being stopped out. This is a good example that illustrates how the pattern can generate a tight risk range, with good risk-to-reward trades.

Does Using the Harami Pattern Guarantee Its Accuracy?

Keep in mind that not all trades will work out to your benefit. It’s unreasonable to expect all of your trades to be profitable. The same logic can be applied to the Harami pattern.

Even though the Harami pattern is easy to spot, and can generate winning trades with a good risk-to-reward ratio, that doesn’t mean that each trade will be a guaranteed winner. This is why we suggest using a 1:2 risk-to-reward ratio on the trading plans above.

This way, you can be right less than half of the time but still allow yourself an opportunity to grow your account since your winning trades are larger than your losing trades.

Cryptocurrency traders commonly follow Harami candlestick patterns. The Harami pattern is found frequently within crypto markets and the process of trading it is straightforward.

Traders enjoy the tight risk range and good reward potential that the Harami pattern offers. However, like any other 

, the pattern isn’t guaranteed to create winning trades. For the best results, it’s important to look for the Harami pattern within the context of the correct trend and to combine its use with other trading tools.

Candlestick Patterns Professional Traders Use

 – A curated list of candlestick patterns most frequently used by traders

 – Learn the basics of candlestick patterns

 (Chart basics: trend, neckline, wedges)

How to Use Bullish and Bearish Harami Candles to Find Trend Reversals

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