In this article, I will tell everything about the uptrend (upward trend), including 2 main parts:
(1) What is uptrend? How to define an uptrend and some super classic examples.
(2) 2 signals and 3 safe trading strategies with high accuracy in an upward rtrend.
“80% of the time, the market goes sideways. And all professional traders focus on the remaining 20% when the market enters a trend. It is simply because there is a trend, there is money.”
To make things easier to understand, all you need to do is to wait for the market to confirm the trend. Then, focus on finding safe entry points.
This may be the article to help you make a lot of money in trading. So, I hope you read it carefully and remember it. I will try to use the simplest words to convey to you.
What is Uptrend? Characteristics and some uptrend patterns
An uptrend is a bullish trend in the market. Prices will continuously increase over a certain period of time. They create higher peaks after peaks and higher troughs after troughs.
Basic characteristics of an upward trend
The following peak is higher than the previous peak. Peak (2) is higher than peak (1). Peak (3) is higher than peak (2), and peak (4) is higher than peak (3).
The following trough is higher than the previous trough. Trough (B) is higher than trough (A). Just like that, the price will increase as the troughs get higher gradually.
These are the two most basic signs for you to identify a market’s uptrend. When the price exceeds a peak, it will inevitably create a new higher one. Your job is to wait for the market to confirm a new trough which is higher than the old one. If this happens, you can claim that an uptrend has been created.
Some popular uptrend patterns
Pattern 1: The most perfect uptrend
An uptrend is considered perfect when it draws a trendline.
What is a trendline? Trendline is a trend line. In an upward trend, the trendline is a straight line connecting troughs. It acts as a support line for the market. And when the price touches the trendline, it will bounce back.
In an uptrend, you just need to draw a straight line connecting 3 troughs together. So, we have a bullish trendline. This is considered the most perfect case.
Pattern 2: The price breaks out of the resistance and enters an uptrend
Signal 1: The price is moving sideways, then it breaks out of the resistance and rises => Peak (2) in the future will definitely be higher than peak (1).
Signal 2: The price retests the recently passed resistance and then rebounds => It creates trough (B) higher than trough (A).
=> The market goes sideways in a certain period of time. It then breaks out of the resistance and rises sharply, creating an uptrend.
Pattern 3: The uptrend creates (support/resistance) levels.
This is one of the 3 super classic upward trend patterns that you need to keep in mind.
As prices rise and form a new peak, this peak will become a resistance zone. If the price exceeds a peak (breaks out of the resistance) and rises, that resistance will always become a support zone. And I will collectively call them levels. The price falls back, touches this level, and continues to rebound. The uptrend process keeps repeating like that.
Pattern 4: Other uptrend patterns
Upward trends are not always the same. Sometimes, it simply creates higher peaks after peaks and higher troughs after troughs. But it does not follow any rules at all.
- The price enters an uptrend. The following peak is higher than the previous peak. But the following trough is equal to the previous trough.
- The ladder uptrend pattern.The price exceeds peak (1) and creates peak (2) which is higher. It then goes sideways, creating trough (B) higher than trough (A). The price continues to rise, creating peak (3) higher than peak (2). And then it goes sideways…. Just like that, the market creates an uptrend within a ladder pattern.
- The uptrend pattern with strong price fluctuations. These are upward trend patterns that still meet the following conditions: the previous peak and trough are higher than the previous ones. But compared to other uptrend patterns, it is not good-looking.
When is an uptrend over?
The answer is simple. It is when uptrend’s conditions are broken. The previous peak and trough are no longer higher than the previous ones => The upward trend has ended.
When an uptrend ends, the market will likely fall into sideways to accumulate bullish momentum. Or it will get into a downtrend.
Detailed examples of uptrend patterns
I have introduced you to all the theories you need to understand when the market is in an uptrend. And now, before going to principles and how to trade in an uptrend, I will illustrate some popular upward trend patterns that you may come across.
– The perfect uptrend pattern, in which we can draw a trendline.
– The upward trend creates (support/resistance) levels.
– The ladder uptrend pattern, in which the price increases to create peaks and then goes sideways.
Principles for trading in an upward trend
There are certain principles in an uptrend that you must keep in mind.
– If you try to fight a running train, it will crush you into pieces. The same goes for an upward trend, aka a bullish trend. If you try to fight against it with DOWN orders, then the probability of losing money is high. So, in an uptrend, you should only open UP orders.
– 80% of the time, the market goes sideways. And in the remaining 20%, the market will show a clear trend. So all you need to do is wait, patiently wait. We only trade when the probability of winning reaches the highest. And price trends are the key to opening successful orders.
– Price will only increase continuously in a period of time. Therefore, the higher the price becomes, the higher the probability of ending an upward trend is. For some professional traders, the higher the price is, the lower the amount of money they trade.
Signals and how to trade binary options in an Uptrend
The mantra: In an uptrend, you can only open UP orders. Please keep this in mind.
There are 2 extremely important signals in an upward trend that you should know. They are (i) Bullish reversal candlestick patterns with high accuracy and (ii) Levels (Support/Resistance) formed in an uptrend.
(i) The most reliable bullish reversal candlestick patterns
There are only 3 candlestick patterns with high accuracy in an uptrend. They are Bullish Pin Bar (Hammer candlestick), Bullish Engulfing, and Morning Star candlestick patterns. These are 3 types of bullish reversal candlestick patterns that have high accuracy (about 80%) in the market. And I will show you how to use these 3 candlestick patterns in the upward trend below.
(ii) Levels (Support/Resistance)
The bullish market creates following peaks higher than previous ones. These peaks become a resistance zone in the uptrend. When the price crosses a peak (breaks out of the resistance) and rises, it tends to retest.
So we have 2 signals in an uptrend for you to open UP orders. And now, I will combine them together and offer 3 strategies to trade binary options.
Strategy 1: Trendline combined with Doji or Bullish Pin Bar candlestick
This is a trading strategy using the trendline. At this time, the trendline acts as a support line. When prices create balanced candlestick patterns such as Doji or bullish reversal candlesticks such as Bullish Pin Bar, this is a reliable signal for the market to rebound.
Open an UP order when: The price creates a Doji or Bullish Pin Bar (Hammer candlestick pattern) candlestick on the bullish trendline.
If the Bullish Pin Bar candlestick pattern (stronger indicator) appears right above the trendline, it is almost certain that prices will rebound.
Strategy 2: A reversal candlestick pattern appears at levels in an uptrend
This is the super classic T.L.S strategy (Trend, Level, Signal). It is a combination of trends, levels, and candlestick patterns. And it is one of the money-making formulae of so many binary options traders around the world.
The price in an upward trend usually tends to retest the levels just passed with bullish reversal candlestick patterns. This is a condition for you to open an UP order This site will focus deeply on the T.L.S trading strategy.
Open an UP order when: The price retests the levels in an uptrend with candlestick patterns such as Bullish Pin Bar, Bullish Engulfing, and Morning Star).
Strategy 3: Reversal candlestick patterns in an upward trend
It is not always in an uptrend that you can draw a trendline. The price does not always retest the old level to create a candlestick pattern. Therefore, this binary options trading strategy was born. Its name is T.S (Trend and Signal).
Or you can understand it more simply as: The price in an upward trend will create trading signals which are reliable bullish reversal candlestick patterns. This is when you can open UP orders.
- The trend is our friend. Invariably, the trend is the best friend of traders. And the principle is: There are trends, there are transactions. No trend means doing nothing.
- In an uptrend, all you need to do is wait for the signal and open UP orders. It is not difficult for you to recognize that the market has been on an uptrend. However, waiting patiently for high precision entry points is extremely difficult.
- Bullish Pin Bar, Bullish Engulfing, and Morning Star are the 3 most accurate candlestick patterns used as entry signals in an uptrend.
- Open the Japanese candlestick chart and review the price history. Verify if the knowledge you have read today on How To Trade Blog is correct or not. We will have articles detailing trading strategies applying trends and candlestick patterns. Please look forward to it.
Please read this article in detail again. Because most likely, your money is made from the knowledge in this article. I will have detailed articles on each strategy, which gives examples and how to open specific orders in binary options trading.
I hope this article will help you understand what uptrend is, as well as how to identify and apply it in a trade.