Entering the rpc credentials directly fails, as follows:

herbert@Spencer:~/bitcoin-0.18.0/bin$ ./bitcoin-cli -testnet -rpcconnect=127.0.0.1 -rpcuser=x -rpcpassword=p getblockchaininfo
error: Authorization failed: Incorrect rpcuser or rpcpassword

whereas picking them up indirectly succeeds:

herbert@Spencer:~/bitcoin-0.18.0/bin$ ./bitcoin-cli -conf=/home/herbert/.bitcoin/bitcoin.conf -datadir=/home/herbert/.bitcoin getblockchaininfo
{
  "chain": "test",
  "blocks": 1576504,
  "headers": 1576504,
  "bestblockhash": "00000000318a0aa170e250d72d2973b4af97812c2c2704a457ce2e7bcbb8c8df",
...

The .conf file is minimal:

testnet=1

server=1

rpcusername=x

rpcpassword=p

it's definitely being picked up from the right place - hence the fact that bitcoin runs in testnet mode.