EUR/SEK Analysis of Multiple ConfluencesI would first like to preface that this analysis is simply for educational purposes and does not constitute a signal. With this idea, I would like to touch on the topic of confluences. When performing technical analysis on pairs in the forex market, it's great practice to study confluences in the market. What are confluences? Confluences are levels in the market where there is more than one indication that a particular price point is of certain interest for a buy or a sell. Although not a guarantee of a buy or a sell, these areas should be watched closely for action of price. Price can be impacted by a variety of factors, including fundamentals. Given this, only after studying and obtaining confirmation should a trade be entered. In this example for EUR/SEK, I see a few confluencing factors as follows:
1. Taking a fib on two separate time frames we see confluence of fibs on both the 50% and 61.8% levels. This area is highlighted. We see zone that is of particular interest.
2. We also can draw trendlines and see confluence between the price point of these fib levels and the respect of the trend line.
3. I have done some further research to study that the fib levels as noted happen to fall at historical key levels in the market.
4. Although the market does not have to follow particular patters, if price followed through as indicated, price action would closely follow that of a cup and handle pattern.
Study such as this is very helpful for strengthening one's technical analysis. I invite you to study this with me, watch price action and take notes along the way.
Again, this is not a signal but simply for educational and study purposes. If you decide to take this trade, use proper risk management and trade at your own risk.
