Another technique we use to determine support and resistance is Fibonacci analysis.  Below is an example of Fibonacci confluence.

Confluence support or resistance is when a Fibonacci grid is drawn from different points and we get an intersection of the Fibonacci levels.

Confluence points are more important than single Fibonacci points.

Above is an example of Fibonacci confluence: Let’s say we want to find the confluence support on the FTSE 100 index from its recent highs at 6900.

We place a Fibonacci retracement tool from the high to point 1. We draw the second grid by taking a new Fibonacci retracement tool and place it on the high and end it at point 2 (thrust bar).

We get an intersection of 38% and 50% from the two Fibonacci grids. We have created a confluence point using Fibonacci support. We can see the market bouncing off 6400.