Confluence ?

[LoveToTrade]

Hello everyone,

Can anyone be so kind as to explain "Confluence" to me ?

I was having a dig around and it seems that it is simply (LOL) a getting together of certain trade confirmations at one point... Is that about it ?

Theoretical prices used here in my example ....

Ie. Price is currently at 1101 and its looking "oversold".

&) There is "support" at 1100.00 S&P.

&) There is a "Fib" at 1100.00 too. Maybe a 50%.

&) Price is coming down from 1108 HOD, and the "round number" of 1100.00 will be a push to get through.

&) On a longer term chart the "upward trend line" passes straight through that 1100.00 point, so there is the horizontal support line there, and a diagonal trend line there too.

&) Need there be any more ? LOL

So, these 5 points all pointing towards the 1100 bounce, are "confluence" ? The fact that the Support, the Fib, the OverSold Nature, the Trend line etc all are completely different indicators on their own, but together indicate "confluence" at 1100.

Is that "confluence" ? Or is it more intricate than that ?

Of course, it could be different indicators, or other points contributing to the confluence.....

Thanks.

 

[timsk]

Hi LTT,
You've pretty well nailed it.
Like much of trading - and TA especially - there's no precise definition (that I'm aware of). It's pretty much whatever each trader deems it to be. My definition of confluence would be something like: 'two or more factors that are completely independent of one another, but nonetheless confirm or support one another, to produces a whole that is greater than the sum of its parts'. Another word for it that would probably serve just as well would be synergy.
Tim.