1# Guide to Trading Using the Trendline on Olymp Trade


uptrend at olymp trade
 

The trendline is a very practical tool that you can find on the Olymp Trade platform . The main purpose of it is to trace the price movements along with the trend. This tool is a graphical feature, which only means it won’t appear automatically. You will have to draw it by yourself. But as difficult as it may sound at the beginning, with this guide, soon you will master using the trendline.

Note: Here we will show you how to use the trendline while trading uptrend, yet it is no different while trading downtrend. Simply use the rules we will teach you here.

We have already mentioned that the purpose of drawing the trendline is to trace the price changes. But it only applies to the current trend. It supposed to connect higher-lows in an uptrend . When speaking of the downtrend, it will naturally join lower-highs. Now let’s explain the basic terms.

Key TakeawaysπŸ”‘

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Contents

Uptrend – basic terms you might need to be familiar with.

UPTREND – This is the first concept to grasp. It basically means growth in prices. The market is dominated by bulls what is shown on the chart by evolving longer bullish candles (green color). The peaks are higher along with the prices rise. In the following diagram, you can see that peaks 2 and 4 are progressively higher.

uptrend basics
How is the uptrend pattern formed?

CORRECTION MOVEMENTΒ – Uptrend doesn’t necessarily mean that sellers are not active. In fact, they undertake efforts constantly to reduce prices. And it causes price fluctuations. When they manage to gain control over the market the prices will have to drop. And this is exactly what we call correction movement. But soon buyers will jump in taking the market over and the prices will rise again.

In the scheme that follows, the correction movement is visible between points 2 and 3. Number 2 indicates the movement when the buyers are the most active part. Nevertheless, the sellers aren’t far from the sight and they are lowering the prices until they reach point 3. During this time, buyers still operate, and in the end, the price changes again going up and reaching point 4.

uptrend basics - adjustment area
Adjustment area in an uptrend

Keep always in mind, that the correction movement will appear in every trend. When we are observing an uptrend, you might notice some bearish candles among bullish ones. Those correction areas create support and resistance levels throughout the trend.

How to use the trendline while trading on the Olymp Trade platform.

To use the trendline you will have to draw it on the chart. To do that, open the Japanese candle chart first. Choose 1-minute interval candles. Then you hit the graphical tools function and pick the trendline. Now you can draw your trendline, exactly the way we did on the diagram below.

uptrend on USDJPY 1m
An uptrend on USDJPY 1m

Pros and Cons πŸ˜ŠπŸ™

Advantages:

  • βœ… Provides a visual representation of price volatility and potential trend reversals
  • βœ… Helps identify overbought and oversold conditions in the market
  • βœ… Can be combined with other indicators for more accurate trading signals

Disadvantages:

  • ❌ Not always effective in choppy or sideways markets
  • ❌ Signals may lag behind significant price movements
  • ❌ Requires understanding and interpretation of standard deviation and moving averages

Which moment is the best to enter the trade while using the trendline on Olymp Trade?

Look at the chart beneath.

developed uptrend

The trend shown here is the uptrend with peaks marked as numbers 2, 4, 6, 8, and 10. As you already know, those are the points of corrections. The price slightly drops just to go up one more time. It is not advised to enter a trading position at these levels. This would require that you enter a sell position, and yet, the uptrend continues.

It is recommended to enter a buy position at points 3, 5, 7, or 9 when the price is significantly lower. Bear in mind that the trend is likely to reverse at some point in the future. Your trading positions should be more short-term with the development of the trend. So if you succeed in placing a position at point number 3, your long position should be carried out for a significantly longer time than if you enter at points 5 or 7.

Using the trendlines can be beneficial for achieving your goals. It is quite simple to draw them on the chart. They will help you identify a true trend.

Go ahead and try this tool immediately on your Olymp Trade demo account . After a bit of practice, you are ready to use it with real money. Just be very careful, as there are no guarantees in trading. Remember, we would be glad to hear from you, whether you put any obstacles on the way or you got it straight away.

Best of luck!

Q&A on Trendlines β“πŸ“ˆ

  • Q: What is the purpose of drawing a trendline?
    A: The trendline helps trace the price changes and identify the current trend in the market.
  • Q: How is an uptrend defined?
    A: An uptrend is characterized by higher-lows and evolving longer bullish candles (green color) on the chart.
  • Q: What is a correction movement in an uptrend?
    A: In an uptrend, the correction movement refers to price fluctuations caused by sellers’ efforts to reduce prices. Buyers eventually regain control, leading to prices rising again.
  • Q: How can trendlines be used on the Olymp Trade platform?
    A: To use trendlines on the Olymp Trade platform, open the Japanese candle chart, select the 1-minute interval candles, and use the graphical tools function to draw the trendline.
  • Q: When is the best moment to enter a trade using trendlines on Olymp Trade?
    A: It is recommended to enter a buy position at points where the price is significantly lower, such as after a correction movement. However, the trend is likely to reverse at some point, so shorter-term trading positions are advised.

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Bart Bregman

Full time day trading, and helping out with Olymp Trade wiki in my spare time to create an awesome platform for beginners. I'm a digital nomad that travels the world while working from everywhere!

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