{"id":5960,"date":"2011-03-09T06:00:03","date_gmt":"2011-03-09T10:00:03","guid":{"rendered":"http:\/\/club.ino.com\/trading\/?p=5960"},"modified":"2011-03-03T12:45:15","modified_gmt":"2011-03-03T16:45:15","slug":"creating-an-edge-with-technical-confluence","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2011\/03\/creating-an-edge-with-technical-confluence\/","title":{"rendered":"Creating an edge with Technical Confluence"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"alignleft\" style=\"margin-bottom: 20px;\" src=\"\/img\/sites\/ino\/email\/2466.jpg\" alt=\"\" width=\"200\" height=\"150\" \/>Today's guest is Aamar of Pivot Farm.com. Aamar is a huge proponent of support and resistance levels and has spent years researching and developing his own methods for finding key support and resistance zones. Today Aamar is going to discuss how merging two traditional types of technical analysis can give you the confidence to see your trades through to profit. Be sure to comment with your thoughts and see Aamar in action during his upcoming <a href=\"http:\/\/broadcast.ino.com\/redirect\/?linkid=1683\" target=\"_blank\">free webinar<\/a>.<br \/>\n-------------------------------------------------------------------------------------------------------------------------------<br \/>\nMost if not at all traders, be they day, swing or buy and holders have come across technical analysis. You know what I\u2019m talking about! Those squiggly lines all the gurus seem to have on their charts! They consist of patterns like the famous \u2018Head and Shoulders\u2019, age old equations seen across nature like \u2018Fibonacci\u2019, even historic wave movements measured by \u2018Elliott Wave\u2019.<!--more--><\/p>\n<p>As great as the names may sound, most if not all these methods and the many others boil down to one key technical principle \u2018Support and Resistance\u2019. Support levels are where demand overtakes supply and Resistance levels are where supply overtakes demand. Most technical analysis methods serve the single purpose of helping traders identify Support and\/or Resistance, however the areas these methods predict can vary from method to method.<\/p>\n<p>Within the technical analysis group are two subgroups we call Proactive and Reactive. Proactive technical analysis methods are based upon a calculation derived from price and include Elliott Wave, Fibonacci, Pivot Points and Trend lines and in many cases identify Support and Resistance areas where price has never been before. These methods are predictive based upon the cyclical nature of markets and use this nature to highlight potential areas of price inflection.<\/p>\n<p>Reactive technical analysis methods are the polar opposite they are derived directly from price action and include Price swing highs\/lows, Volume profile and Open Gaps. These methods are based upon the direct action of price, levels that were actually traded be it yesterday or 30 years ago. Reactive technical analysis relies upon \u2018market memory\u2019 that traders will recognize or respect past areas of price inflection.<\/p>\n<p>Now following on from this logic, if most technical analysis methods are used to identify Support and Resistance, why are there so many different methods? Well one of the main reasons for these adaptations is market personality; the market can go through many distinct personalities or phases. This is why a trading style that\u2019s been profitable for you for the last 3 months may become a loser now that the market \u2018phase\u2019 has changed. Markets can go through bullish, bearish, sideways, high volatility, low volatility and every other phase in between.<\/p>\n<p>The Schizophrenic nature of evolving market environments mean that in given phases certain types of technical analysis work better than others. This is where the concept of technical confluence can offer a great edge. Technical confluence much like a rope consisting of multiple strands is the combining and intertwining of multiple technical analysis methods both Proactive and Reactive to create a \u2018community\u2019 view. This community view includes \u2018market memory\u2019 (reactive) and a cycle based prediction (proactive), these 2 analysis groups offer great insight and confirmation for the savvy trader.<\/p>\n<p>So practically what does this mean? Say for example we analyze an S&amp;P chart using a few of these methods and find a 50% Fibonacci retrace at 1312.00, a price swing low at 1312.75 and a Volume peak at 1312.50. Based upon the confluence of these methods and the differing trading groups who will be viewing that area, the odds of a reversal in the 1312.00-1313.00 area are stacked in our favor.<\/p>\n<p>Why does this work? Combining multiple methods means combining multiple groups of traders, so more \u2018eyes\u2019 on that area. Furthermore the combination and confirmation from multiple methods both reactive and proactive helps traders adapt to changing market phases with more confidence. Probably the most important reason to use Technical Confluence is the dreaded P-word \u2018Psychology\u2019. Technical confluence as a psychological edge cannot be emphasized enough, if you are confident and firm in your reasoning for a trade you are much more likely to manage that trade to fruition.<\/p>\n<p>Best,<\/p>\n<p>Aamar Hussain<\/p>\n<p><a href=\"http:\/\/broadcast.ino.com\/redirect\/?linkid=1683\" target=\"_blank\">PivotFarm.com<\/a><\/p>\n<!-- AddThis Advanced Settings generic via filter on the_content --><!-- AddThis Share Buttons generic via filter on the_content -->","protected":false},"excerpt":{"rendered":"<p>Today's guest is Aamar of Pivot Farm.com. Aamar is a huge proponent of support and resistance levels and has spent years researching and developing his own methods for finding key support and resistance zones. Today Aamar is going to discuss how merging two traditional types of technical analysis can give you the confidence to see [&hellip;]<!-- AddThis Advanced Settings generic via filter on get_the_excerpt --><!-- AddThis Share Buttons generic via filter on get_the_excerpt --><\/p>\n","protected":false},"author":41,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[3681,3680,1585],"class_list":["post-5960","post","type-post","status-publish","format-standard","hentry","category-general","tag-creating-an-edge-with-technical-confluence","tag-pivot-farm","tag-support-and-resistance"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v23.4 (Yoast SEO v23.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Creating an edge with Technical Confluence - INO.com Trader&#039;s Blog<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2011\/03\/creating-an-edge-with-technical-confluence\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Creating an edge with Technical Confluence - INO.com Trader&#039;s Blog\" \/>\n<meta property=\"og:description\" content=\"Today&#039;s guest is Aamar of Pivot Farm.com. 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