FOREX INDICATOR: CONFLUENCES


Technical Confluences Indicator

Data updated every 15 minutes
Yohay Elam

Resurgent risk appetite and central banks’ imbalances had sent the EUR/USD pair just above 1.1180, it’s highest since early August. The pair has cleared multiple resistances, now supports, after a dovish Fed, a balanced ECB, and more relevantly, following news suggesting the US and China are close to a deal. Boris Johnson’s outstanding victory in UK elections added to the bullish case of the shared currency.

The Technical Confluences Indicator shows that, for the EUR/USD pair, the path is clear to the upside as there’s only a medium relevant resistance at around 1.1220, where it bottomed in 2018. Around the level, there are other significant indicators that reinforce the area. Nevertheless, and once clear there’s nothing in the way toward the 1.1300/10 price zone.

Things are a bit more complicated for bears, with intraday highs and the 20 DMA at around 1.1150, providing an immediate support. A stronger one comes at 1.1120, where the pair topped in the previous week, and also has the 23.6% retracement of the October rally. Once below this last, 1.1065 is the next relevant level, although chances of a slide toward this last are limited.

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What are the Technical Confluences?

The TCI (Technical Confluences Indicator) is a tool to locate and point out those price levels where there is a congestion of indicators, moving averages, Fibonacci levels, Pivot Points, etc. Knowing where these congestion points are located is very useful for the trader, and can be used as a basis for different strategies.

HOW TO READ THE CHART?

Confluence of technical levels

This tool assigns a certain amount of “weight” to each indicator, and this “weight” can influence adjacents price levels. This means that one price level without any indicator or moving average but under the influence of two “strongly weighted” levels accumulate more resistance than their neighbours. In these cases, the tool signals resistance in apparently empty areas.

Color code

The tool detects and draws those price levels in which the confluences of indicators and key levels are recorded. Blank lines represent areas where the price can move without technical resistance. The levels with the highest assigned weight of resistance are drawn with the darker colour, this colour being degraded as the influence of the maximum levels decreases.

Tooltip

You can see which indicators are within each price level by placing the cursor on the level. The explanation uses a code that indicates:

 

HOW TO USE IT?

With the TCI tool, you can easily locate areas where the price can find a support zone or resistance zone and make trading decisions. If you are a short-term trader, you will find entry points for counter-trend strategies and hunt a few points each time. If you are a medium- and long-term trader, this tool will allow you to know in advance the price levels in which a medium / long-term trend can stop your travel and rest, where to undo positions or where to increase your position.

Bars’ length

The length of the bars of the TCI tool is determined by the weight assigned by the algorithm at each price level. The longest bar in a confluence indicates the level of the price segment where the highest level of confluence of the segment is located. In case of similar levels in the same price range, the maximum length will be assigned to that bar with more accumulated indicators.

Key Technical Levels
Key Technical Levels