What is Fibonacci confluence?
Quick Answer
Fibonacci confluence occurs when multiple Fibonacci levels from different swings align at the same price zone, creating stronger support/resistance.
Detailed Explanation
Fibonacci confluence happens when retracement or extension levels from multiple price swings cluster at the same price area. This confluence creates a 'high probability zone' that often acts as strong support or resistance. The more Fibonacci levels that align, the more significant the zone. Traders use confluence to identify optimal entry and exit points.
Key Points
- 1Multiple Fib levels at same price = confluence
- 2Stronger than single Fib level
- 3Combine retracements from different swings
- 4Add extensions for more confluence
- 5Best zones have 3+ levels clustering
Example
38.2% retracement of recent swing = $150. 61.8% of prior swing = $151. Both near $150-151 creates confluence zone.
Related Questions
What are the key Fibonacci retracement levels?
The key Fibonacci retracement levels are 23.6%, 38.2%, 50%, 61.8%, and 78.6%, derived from the Fibonacci sequence.
What are Fibonacci extension targets?
Key Fibonacci extension targets are 127.2%, 161.8%, 200%, and 261.8%, used to project profit-taking levels.
What is the best Fibonacci level for entry?
The 50% to 61.8% retracement zone is considered the optimal entry area for most traders.