Higher Timeframe Trend Validation
Before generating any trading signal, our algorithm first examines the 1-hour chart to establish the dominant market trend direction.
Trend Identification Process
- ✓ Moving Average Analysis: 50 and 200 period SMAs identify trend direction through crossover patterns
- ✓ Price Relationship: Current price position relative to moving averages confirms trend strength
- ✓ Confidence Enhancement: Signals matching the 1H trend receive additional strength points
- ✗ Trend Conflict Prevention: Signals opposing strong 1H trends are automatically filtered or reduced in confidence
Market Condition Assessment
The ADX (Average Directional Index) indicator enables our system to classify market behavior as either trending or ranging, allowing strategy adaptation accordingly.
ADX exceeds 25. Momentum-based approaches perform optimally. Follow trend direction for best results.
ADX below 25. Range-bound strategies recommended. Target oversold/overbought levels for entries.
ADX Methodology
Calculated over 14 periods, ADX quantifies trend intensity. Readings above 25 signal strong directional movement, while values below 20 indicate consolidation phases.
Trading Session Adaptation
Each global trading session exhibits unique volatility patterns and currency pair behaviors. Our algorithm dynamically adjusts signal parameters to match current session characteristics.
Optimal for momentum-based approaches. Trend-following strategies excel. Maximum signal quality during session overlap periods.
Range-bound strategies preferred. Mean-reversion techniques more effective. JPY and AUD currency pairs typically show increased activity.
Elevated confidence requirements applied. Reduced signal frequency but improved signal-to-noise ratio during quieter periods.
Multi-Indicator Confirmation Protocol
Trading signals are only produced when multiple independent indicators converge on the same directional bias. Greater indicator agreement results in elevated confidence ratings.
Core Technical Analysis Tools
Confidence Scoring Mechanism
- → Initial score derived from indicator consensus
- → Additional 10 points for 1H trend alignment
- → Session-based adjustments ranging 5-15 points
- → Trend-conflicting signals penalized or eliminated
Timeframe Selection Options
Our platform supports 16 distinct timeframe configurations, each calibrated for specific trading styles and risk profiles:
Recommended: Demo Account Practice
Prior to engaging in live trading, we highly recommend extensive practice using Olymp Trade's risk-free demo environment. This enables comprehensive signal testing and market behavior understanding without capital exposure.