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Applying Fibonacci Cluster and Confluence Zones
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Applying Fibonacci Cluster and Confluence Zones

  #111 (permalink)
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Fat Tails View Post
The statistical approach, which I use is semi-scientific only. The indicator detects 54 support and resistance lines in 10 different time frames, which is a total of 540 lines. Each timeframe is represented by a ZigZag, which runs over the daily lookback and the chart period. The 10 zigzags vary by their minimum deviation, which is calculated from the average true range over the entire chart period.

Starting from the swing highs and lows, the indicator calculates from each of the 10 zigzags

- prior swing highs and lows (2 levels up and 2 levels down)
- prior micro swing highs and lows (4 levels up and 4 levels down)
- Fibonacci retracements (5 levels up and 5 levels down)
- Fibonacci expansions (6 levels up and 6 levels down)
- Fibonacci projections (6 levels up and 6 levels down)
- Measured moves (4 levels up and 4 levels down)

which makes up for a total of 54 S/R lines per zigzag. For each type of line I have run distributions over various instruments to make an estimate of the conditional probabilities that price reverses when hitting a zone with a width of x percent around that line. Based on those findings, I have attributed a statistical weight to each of the 54 line types. The weights are then modulated by a timeframe factor. Larger timeframe lines are considered being more important than smaller timeframe lines. The modulation factor is based on coherence of results, that is empirical testing of the outcome.

I am not willing to share all the statistics, as I want to keep a few of my secrets.

Thank you for the insights, this is an impressive approach, and your description gives a good idea how to approach the selection. I am weighting prior turning points in following way:

- count the number of rejections at a certain zigzag pivot within a certain timebox, like 1h box. I allow a certain % above and below the pivot to have an area rather than a single price. Price has to exit and enter that resistance to count.
- and if the price is rejected for more than a certain % gives another score for the level.
- if the same area gets retested again in an even higher timebox i.e. 4h it gets an additonal score up

but I have to put that still together into a session timeframe, since I want to make the algo checking for the last 20 days which time of day the projected prices are relevant.

for fibs I look only in one level. it is the 0.866 of the ADR of the last 20 days at the beginning of the London session Hi and Low to frame up the upcoming session. I calculate the upcoming targets at 6:00 GMT. These prices show a significant high turn around probability for certain instruments, esp. in the EURUSD. these lines show high relevance up to 20:00 GMT.

When a level is touched, John Ehlers Swing position tells me if the market swing is expected to turn in the next 1-2 hours or not.

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  #112 (permalink)
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where can I find fibzone indicator plotting line on the chart?

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  #113 (permalink)
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supermht View Post
where can I find fibzone indicator plotting line on the chart?

One or two Fibonacci indicators can be found in the downloads, for the confluence indicator, which could be seen on the previous charts, you would need to contact me via private message, or I will come back to you.

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  #114 (permalink)
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Well done.
Just Something I need

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  #115 (permalink)
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session template

I like to do this kind of analysis on higher time frames, one hour and up.

just wondering what session template you use.

- only eth
- eth and rth
- 24/7

I know the difference is not huge, but it does give different results.

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  #116 (permalink)
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Silvester17 View Post
I like to do this kind of analysis on higher time frames, one hour and up.

just wondering what session template you use.

- only eth
- eth and rth
- 24/7

I know the difference is not huge, but it does give different results.

The Fibonacci Analysis just uses swing highs and lows, and then calculates retracements, expansions, extensions, alternates, etc. Therefore the ETH and 24/7 templates will give exactly the same results.

If you use an RTH template you may miss some of the swing highs and lows which occured off-session. In that case you will get slightly different results.

Fibonacci Analysis is best suited to FOREX and currency futures. For these I always use ETH templates.

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  #117 (permalink)
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Fat Tails View Post
The Fibonacci Analysis just uses swing highs and lows, and then calculates retracements, expansions, extensions, alternates, etc. Therefore the ETH and 24/7 templates will give exactly the same results.

If you use an RTH template you may miss some of the swing highs and lows which occured off-session. In that case you will get slightly different results.

Fibonacci Analysis is best suited to FOREX and currency futures. For these I always use ETH templates.

thank you.

yes, agree it's best for currencies.

but if you're using a 1 hour chart, there should be a difference between eth and 24/7 imo. because of different starting points you'll get different sizes of bars. of course it's only minimal. no big deal.

Attached Thumbnails
Applying Fibonacci Cluster and Confluence Zones-es-12-11-60-min-10_26_2011.jpg   Applying Fibonacci Cluster and Confluence Zones-es-12-11-60-min-2-10_26_2011.jpg  
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  #118 (permalink)
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Silvester17 View Post
thank you.

yes, agree it's best for currencies.

but if you're using a 1 hour chart, there should be a difference between eth and 24/7 imo. because of different starting points you'll get different sizes of bars. of course it's only minimal. no big deal.

It works great for commodities too.

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  #119 (permalink)
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Nasdin94 View Post
It works great for commodities too.

that's what I'm doing as well

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Silvester17 View Post
that's what I'm doing as well

Please excuse me on this but I'm just curious.
About the chart that you just posted on the previous post.

Can you help me draw a fibonacci on your chart like this?
I just want to see the 200 level, the 261.8 level
and the 314.8 and the 361.8 level

And repost a picture please.

I'm trying to see whether my particular method of fibonacci works for this type of market as well.

Thank you so much if you do so.

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