The Binomo platform offers a very useful graphical tool which is a trendline. You will need to draw it yourself, but I will guide you through this procedure. The trendline follows the movements of the price along with the trend.
During the uptrend, the trendline joins higher lows. During the downtrend, it connects lower highs.
Thinking about becoming a successful trader you cannot ignore the skill of drawing and using the trendline. This is why I decided to write this article for you. I am going to use an example of the uptrend. Be aware that during the downtrend analogous rules shall be applied.
Essential aspects of the uptrend
First, let’s talk about the uptrend itself. It happens when the bulls are in charge of the market. You will see bullish, i.e. green candles on the chart. The price will move upwards. It does not mean that the price cannot adjust. But if it occurs, it will be just for a short while. Then it will move further up forming a higher peak in comparison to the previous one.
Take a look at the picture below. Although the price went down for a moment (3), peak number 4 is visibly higher than the peak number 2.
These small adjustments happen because the bears are trying to take control over. They try to lower the price and so the movements down are observable. Nonetheless, the price adjustments are temporary and soon after the bulls are back at the steer.
In our exemplary diagram, the price adjustment takes place from point number 2 to 3. This is when the sellers try their power to drive the price down. But at point 3 the buyers come back and the price is going high up to point number 4.
Every trend will produce smaller or bigger price fluctuations. During the uptrend, it will be a bearish force that brings the price down. You will soon notice that the correction zones determine the support and resistance levels throughout the trend.
How to trade with the trendline during the uptrend on the Binomo platform
Drawing the trendline on the price chart on Binomo
As I mentioned in the beginning, you will have to draw the trendline yourself. Once you log in to your Binomo account and set the chart for Japanese candlesticks with a chosen time frame, you will need to find the “Chart preferences” icon on the left side of the platform. Click on it and go to the “Tools” tab. There, you will find a tool that is called the “Trendline”. Select it, choose the colour and thickness, click Apply and you will be able to start drawing.
Remember, that during the uptrend you have to link higher lows. Take a look at the exemplary chart below.
When you are satisfied with your line, simply click on the “Stop Drawing” button.
Opening a buy position with the trendline on Binomo
It is recommended to open buy positions during the uptrend. Check out the diagram beneath.
During the uptrend here, the price has formed the peaks 2, 4, 6, 8 and 10. These are the moments when the bears came into action and brought the price down. Although these are temporary price adjustments, you should not enter the trade on tops.
Instead, wait until the bulls regain control that is when the price is in points 3, 5, 7 or 9. These are good moments to open buy positions. Nothing lasts forever and the trend will change the direction at some point in the future. That is why it would be a good idea to hold your positions open for a shorter time as the trend progresses. This means that your position should be shorter at point 5 than at point 3. And at point 7 it should be shorter than it was at point 5.
Drawing the trendline is really simple. Just remember that you have to connect higher lows during the uptrend and lower highs in the downtrend. The trendline is used to verify a genuine trend.
You may wish to practice using it on the Binomo demo account. This is a very helpful feature on the Binomo platform. If you have any comments on trading with the trendline, share them with us in the comments section down below.
Best of luck!
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