If you are looking for an Olymp Trade trading strategy, you must know how hectic it is to get one that works.
As such, it becomes a headache to actually predict a profitable trade. But not today.
In this article, I will show you how to combine two indicators to increase your chances of scoring that elusive win.
Here, all you need is to make sure that the two indicators discussed here have the same signals, then enter the trade.
Do not enter a trade unless these two indicators I am about to show you are confirming each other’s signals.
Does that make sense?
Here is the thing:
What need is it to combine two indicators if you will end up using only one? And what if one indicator shows false signals? Then you will never know when to win.
Now, in this strategy, we will be using the Fibonacci fan indicator to generate tradable signals and then use the RSI oscillator to confirm the signals.
To give you a foundation for this strategy, I will go over the individual indicators in briefs. Starting with the Fibonacci fan.
How does the Fibonacci fan indicator work on Olymp Trade?
In a nutshell, the Fibonacci fan is a trend-following indicator based on the Fibonacci ratios 38.2 percent, 50 percent, and 61.8 percent.
It uses three trend lines drawn from either the peak or trough of a trend (depending on the direction) to the Fibonacci retracement levels.
Fibonacci fan indicator is commonly used to identify support and resistance regions during a pullback.
During an uptrend, for instance, you draw the fan line from the lowest price point in the chart (trough) to each of the three Fibonacci ratios. And from there, you can predict support and resistance points in case the price experiences pullback.
How about you find time and read our detailed guide on how the Fibonacci fan works – here.
How does the RSI indicator work on Olymp Trade?
Again, this is just an overview to demonstrate this trading strategy. But if you want to learn more about the RSI indicator, follow this link.
With that said, the RSI or Relative Strength Index is an oscillator, which means, it fluctuates between two points, commonly 0 and 100, to determine prevailing directional market bias.
Made up of two lines and a signal line.
Based on this fact, every time the price goes above the 70 value, it is considered overbought. Meaning that the buyers in the market are in control. As such, you should expect the price to linger in this zone for some time but not forever. At some point, it will come down.
On the flip side, when the signal line goes down below the 30 level, it is a sign that the underlying asset is oversold.
This is a bears’ market, and you should expect the prices to stick around this zone for a little longer, thanks to the dominant nature of the bears. But when it reverses, that’s an imminent uptrend.
To this point, you have a basic understanding of these two indicators. We shall now look at how to combine both of them to generate profitable predictions on Olymp Trade.
Not so fast, though.
Let’s add them first to your chart.
Setting up the Fibonacci Fan and the RSI Indicators on Olymp Trade.
- Make sure you are logged in to your Olymp Trade account. If you don’t have one yet, register for FREE here.
- First, add the Fibonacci fan indicator by clicking on the indicators tab and selecting a Fibonacci fan. Secondly, add the RSI indicator by following the same process, and only select the RSI.
Take note of this:
You must add the two indicators for this strategy to work.
Additionally, you will plot the Fibonacci fan based on the prevailing market direction: in an uptrend, connect the lowest point to the Fibonacci ratios and the opposite is true during a downtrend, connect the peak to the ratios.
Also, the Fibonacci level of 61.8% is our main support line. Keep that in mind and you are ready for this trading strategy.
Trading strategy using the Fibonacci fan and the RSI indicator on Olymp Trade.
Recommended time frame is 1 hour or higher
Enter long buy position during a pullback.
- Draw the fan lines from the lowest point to the three Fibonacci ratios (38.2%, 50%, and 61.8%).
- Wait for the price line to break the 38.2% line and the RSI is showing that the asset is oversold (below 30)
- Enter a long buy position.
- The support line is 61.8%.
Enter a short position.
- When the Fibonacci fan 38.2% line is hit.
- The RSI is in the overbought zone (above 70).
- Expect the 61.8% line to act as resistance.
How not lose money on Olymp Trade using this strategy
Make sure you follow these guidelines:
- Make sure both indicators are confirming each other’s signals.
- You should only trade major trends. Avoid ranging markets.