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On Thursday, April 11, 2002, 9:09:50 PM, Neal Hughes wrote:
>>(1) Fibs contribute a small but 'fixed' probability, but the overall
>>probability is improved by confluence with other indicators, or
NH> I'm saying that Confluence of Fibonacci levels dramatically increases
NH> the likelihood that price will turn at that level.
>>(2) Fibs have a conditional (and variable) probability that varies
>>according to other 'market conditions'?
NH> Well, Fib support will more likely "hold" in a retracement of an
NH> up-trend, than it would if there were a strong down-trend.
Actually, I was asking a slightly different question. Imagine, if you
will, a graph of probability vs time where the line is flat, thus
indicating a constant probability as a function of time. This is what
I was alluding to in (1) above. In this case a certain Fib always has
the same reliability, independent of the 'market conditions'. A
'signal' occurs when multiple Fibs coincide in price. Several
'smaller' probabilites occur together.
Then, imagine a graph in which the probability goes up and down with
time - not a flat line, but a curve. This is case (2). In case (2), I
was asking if the ups and downs are caused by, or related to, certain
'market conditions'? For example, do the Fibs seem to work better
(higher probability) when the market is in a trend vs in congestion?
In this case a certain Fib can have a different reliability at
different times.
One reason this is important is that in case (1) confluence is
'necessary', but in case (2), it is not, and a single Fib can be
considered as independent. This affects how it is analyzed and how it
might be used.
NH> Confluence to me is a specific term defined as an area where
NH> multiple Fib levels coincide.
NH> I also use other indicators to fine-tune and trigger the trade.
NH> But not in a way that I would call Confluence. For example,
NH> Fibonacci would be predicting (in advance of market action) a
NH> possible turning point. I wait for another indicator (MACD) to
NH> prove that the market is turning (lagging indicator, showing a
NH> turn AFTER market action).
Are you thinking that confluence is associated with Fibs only? Could
it be extended to any coincidence of indicators?
ztrader
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