Confluence

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Confluence

When a same trade signal comes from various technical analysis then Confluence occurs.
Usually, these are technical indicators, but may also be combined with chart patterns, price action, and chart overlay tools.
The term Confluence is originally used for the geographic point where two or more rivers are joined together
Now it is also used in the trading context using same logic for the description of Confluence of many signals of the trading
A confluence of indicators creating a strong resistance area consisting of is given in the chart given below:

A descending trendline
200 SMA acting as a dynamic resistance level
61.8% Fibonacci retracement level
RSI showing an “oversold” reading

Confluence

Other examples of confluence are:

RSI signaling oversold and the price is trading near a support level.
A trendline coming together at the bottom of the Bollinger Band.
Price trading near its 200 SMA, the 50% Fibonacci retracement level meeting, and a major support level.

The concept of Confluence can be summarized as:
“An area in the market where two or more structures come together to form a high-probability buy/sell zone.’
The confluence of trade signals can give a greater accuracy and profitability.
When one or more trading technique or analysis is combined to increase the odds of a winning trade, it is called Confluence Trading.
Various trading indicators can be used that all give the same “reading”, as a way to confirm the validity of a potential buy or sell signal.
Confluence refers to any circumstance where you see multiple trade signals lining up on your charts and telling you to take a trade.
For example, if you use a single technical analysis tool that has a 40% accuracy rate for predicting price movements, and then interconnected technical analysis to further filter your decision By using the tool, you increase your odds of winning.
In other words, you use the concept of "confluence" to find trading setups using a variety of technical analysis methods, and all these independent forms of analysis indicate similar directional price movements.
For example, this occurs when support and resistance levels are combined with Fibonacci retracement and extension levels.
Psychological levels, back heights and lows, and dynamic support and resistance levels (such as the Moving Average or Bollinger Bands) can also serve as areas of interest.
When these levels meet, they form strong support or resistance levels, which can happen as entry points or take profit levels.

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Economic Indicators

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