What is Confluence in Trading?

What is Confluence?

Confluence occurs when multiple independent signals align, increasing the probability of a trade working. Traders look for confluence between price structure, indicators, and fundamentals to confirm setups.

Sources of Confluence

• Technical: Trendlines, support zones, and chart patterns lining up.
• Indicator: Multiple oscillators agreeing on momentum direction.
• Volume: Breakouts accompanied by volume expansion.
• Fundamental: Economic data supporting the technical picture.

Building a Confluence Checklist

• Define structure first: Identify trend direction and key levels.
• Add confirmation: Use tools like RSI or MACD for momentum.
• Incorporate catalysts: Ensure upcoming news supports the bias.
• Standardize entries: Document the exact mix of signals that qualifies as confluence.