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Course overview

4. The importance of confluence

Quiz

1/1

Which is the most reliable technical indicator?

Convergence across many indicators raises the probability that the signal is accurate.

A) Support and resistance

B) Moving Average Convergence Divergence (MACD)

C) Relative Strength Index (RSI)

D) A convergence of the above

///Technical Analysis Fundamentals

Technical Analysis Fundamentals

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phone

Technical analysis hero image

Technical analysis hero image

1. What is technical analysis?

2. Technical Analysis Fundamentals / Price charts and indicators / Desktop

3. Key Chart Patterns

4. The importance of confluence

Previous chapter

Finally, when performing their technical analysis, traders often look for confluence. This is when several technical indicators all point to the same conclusion. This convergence strengthens the underlying signal, giving traders more confidence in a potential trade setup. The greater the agreement across indicators, the more probable it is that the signal represents a genuine market opportunity, rather than random noise. However, convergence can also sometimes lead to false signals. Therefore, using confluence alongside other analysis techniques, like fundamental analysis, is crucial for making sound trading decisions.