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What does "Confluence" mean?



In technical analysis, confluence refers to:


"The coming together of multiple technical indicators or signals at a particular price level, which increases the likelihood that this level will act as a significant support or resistance level."


For example, let's say a trader is analysing a chart and notices that the 50-day moving average, a Fibonacci retracement level, and a trendline all converge at a specific price level. This confluence of technical indicators suggests that this price level is particularly significant and could act as a strong support or resistance level.


Confluence is often used by traders to identify potential entry or exit points for trades, as well as to help confirm or validate other technical analysis signals. When multiple indicators or signals converge at a particular price level, it is generally considered to be a stronger indication of a potential trend reversal or continuation than when only one indicator or signal is present.

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