# Chapter 10, Part III. Advanced talks on Fibonacci Retracement. Page 2

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 15, 2013.

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1. ### Sive Morten Special Consultant to the FPA

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Commander in Pips: Both. But to understand why it so important, lets use for the moment just the major levels – 0.382 and 0.618. Now I ask you to draw Fibonacci retracement as from yours X point as from mine one and let’s see what will occur…

Pipruit: And what level should I use as A point?​

Commander in Pips: Since, as we’ve said A-point should be the lowest one - there couldn’t be two lowest levels. It means that A point will be the same for both X points. Let’s name them “Xp” (X Pipruit) and “Xc” (X Commander).

Pipruit: Ok, I’m done:​

Commander in Pips: Let’s see… Hm, looks nice, I also add just a single notification for you, to avoid some confusion about A point. So, what do you see here, something special…?

Pipruit: Well, I see that 0.618 level from your Xc point and 0.382 from mine Xp almost coincide at the same level.​

Commander in Pips: Right. This method was invented by Joe DiNapoli and he calls such coincidence as “Confluence area”. In our case this is Confluence resistance, but if it will build from up thrust, then it will be Confluence support.

Pipruit: And why is it so big deal about it?​

Commander in Pips: Because it creates an area that is much stronger than just a single level.

Pipruit: And could Confluence be created by, say, matching of 0.382-0.382 levels, 0.382-0.50, 0.618-0.5 and others combinations from different X points?​

Commander in Pips: Well, Confluence definitely could not appear from the same levels – such as 0.382-0.382, or 0.5- 0.5 etc… Although I suspect, that Confluence of 0.5-0.786 levels could create stronger support that single level, DiNapoli does not clarify any other combinations as Confluence – only 0.382-0.618 combination is treated as Confluence.

Pipruit: And how close 0.382 and 0.618 level have to be to each other? Do they have to match pips to pips?​

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