Fibonacci Convergence or Confluence

Take Fibonacci retracements and projections from a number of different lows or highs to find a level where 2 or more retracements/projections are at the same level. This will give a level with a strong possibility of a turning point.

Convergence is when the coincidence of 2 or more Fibonacci price relationships comes together with a relatively tight range.

For example, a Fibonacci convergence is where a 38.2% off one high and 50% off another and a 61.8% off another, converging on the same area of the chart. A Fibonacci extension can converge with a Fibonacci retracement creating a bounce.

For example, a Fibonacci convergence is where a 38.2% off one high and 50% off another and a 61.8% off another, converging on the same area of the chart. A Fibonacci extension can converge with a Fibonacci retracement creating a bounce.

Fibonacci Extensions Confluence

Two Fibonacci retracements have been drawn on the chart above from two different low points. Three cluster points are drawn:

A - where the 61.8% and 32.8% retracements coincide B - wherethe 38.2% and 23.6% retracements coincide C - wherethe 61.8% and 100% retracements coincide.

Trade Examples:

Example 1.

GBPUSD 30 min chart.

Example 1.

GBPUSD 30 min chart.

Fibonacci Extension Numbers

In the chart above, we have a classic ABCD pattern where the entry point is at point C, a 76.4% retracement and a Morning Star Candlestick Pattern.

The point C was at 76.4% and not 61.8% (76.4% is popular on the GBPUSD), but by waiting for the candlestick pattern i.e. the Morning Star we found conf rmation of the reversal and a good trade to point D the 161.8% projection.

Note also the point C was dose to a Double Bottom with point E and formed a Higher Low Pattern with point 1

<3BPUSD,H4 1.7333 1.7382 1.7331 1.7378

261.8

A second exit at point E a 261.8% projection whiph also converges with a 161.8% projection

Exit at point D a 161.8% Protection

Exit at point D a 161.8% Protection

Entiy. at C aJ>/L8 % retracement and _ ai Double Bottom and Bull Engulfing Candle Pattern

MetaT>ade>, © 2UU1-2UUE MetaQuotefs

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Entiy. at C aJ>/L8 % retracement and _ ai Double Bottom and Bull Engulfing Candle Pattern

MetaT>ade>, © 2UU1-2UUE MetaQuotefs

28 Sen 2004 29 Sen 08:00 30 Sen 16:00 400 00:00 5 Oct 08:00 6 On 16:00 8 0 0 00:00 11 0 0 08:00 12 00 16:00 14 0 0 00:00 15 0 0 08:00 18 00 16:00 20 0 0 00:00 2100 08:00 22 00 16:00 26 0 0 00:(

Looking at the GBPUSD 4 hour chart we have the two trade examples:

1. Entry at Point B on the Bull Engulfing candle with a Target Ext at the 61.8% retracement of the move A to B

2. The ABCD pattern with entry at C being the 61.8 % retracement of the move A to B confirmed by the double bottom at point C or the Bull Engulfing candle above C. The trade exits are at 161.8 % projection at D or the 261.8% at E. Ether exit gave very good trades. Note there is a Fibonacci convergence at point E.

Note that point D also forms a Double Top with point A. This convergence of the Double Top and the 161.8% projection increases the reliability of the exit point.

Sen 2004 10 See. 04:00 13 SeD 12:00 14SeD 20:00 16 Sen 04:00 17 SeD 12:00 20 SeD 20:00 22 SeD 04:00 23 SeD 12:00 24Sen 20:00 28 SeD 04:00 29 SeD 12:00 30 SeD 20:00 40ct 04:00 5 Oct 12:00 6 Oct 2

Again using the ABCD pattern another good long term trade with entry from the 61.8% retracement confirmed by a Higher Low Chart Pattern.

Exit at point D the 161.8% Projection of the move from point A to point B...

GBPUSD,H4 1.7333 1.7382 1.7331 1.7378

MetaTrader, © £001-2005 MetaQuotes Software Corp.

Entry at po^nt C a 50% retracehient and a^ B e a M s h^ R eje et ip n J^an die Pattern.

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