Trading Confluence
Confluence - con·flu·ence | \ ˈkän-ˌflü-ən(t)s
A coming or flowing together, meeting, or gathering at one point.
The flowing together of two or more streams.
Synonyms: Conjunction, meeting, convergence.
Here at GOLD RUSH, we urge our community to look for confluence in their setups. We like to take high probability trades, based on multiple indicators or patterns in the price action that gives our trade a strong conviction. Let’s look at this example in $SPX this past week.
On the daily timeframe, /ES arrived at a key Fibonacci level, based on a recent low to high move in the price action. This key level often triggers a buy signal for trading algorithms, as well as seasoned traders who use fibs as an indicator.
On this same day, /ES approached the 50 Simple Moving Average, which tends to act as a strong support if approached from above, or a strong resistance if approached from below. Many traders keep the 50 SMA on their screen to confirm the trend, along with other popular moving averages.
On this same day, /ES approached a trendline that has held as support for many previous sessions, since March 2020 lows. This trendline has since served as a crucial level where many people feel that /ES is on sale, and it has continued to act as a “buy zone.”
We analyzed the price action on /ES and noticed a confluence of these three very important levels/indicators, and confirmed to the community that the only direction for /ES, $SPX, $SPY, and the overall market would be bullish/long, and urged our members to trade to the trend.
Confluence is very powerful and provides a strong conviction when entering positions. We at GOLD RUSH love taking high-probability trades and a confluence of multiple items only add to our bullish or bearish thesis.
Click here to try us out for 7 days, on the house.