S/R Confluence

Písmo: A ++ A --

An important concept to understand when trading with support and resistance is what I call a *S/R Confluence*. A confluence of S/R happens when numbers from several different methods fall within the same area; when several technical indicators line up at the same time to signal an imminent change in the market. Like, for example, having an entry pattern be confirmed with a corrective trendline, after a test and failure of a strong resistance level.

What makes this concept of confluence so vital to my methodology? Since I believe that the market is a representation of the mass psychology of traders, and know damn well that the majority of traders are technically oriented, any confluence of indicators will be noticed and acted upon by the largest amount of folks at any given time.

The coherent market hypothesis attributes the characteristics of *memory* and *consciousness* to the markets, since the markets are a sum total of the aggregate thoughts and emotions of a large crowd. It stands to reason that any convergence or confluence of information will dramatically impact the market, creating the conditions for change.

Tom