- A trading thesis can also be formed by combining both technical and non-technical signals, which means it is more likely to be formed.
- Traders tend to use popular charts such as BTC, ETH, and USDT.D to obtain more confirmation and determine the direction of the market.
- The external confluence plays out heavily in terms of turning points due to emotions, both on the market sentiment side and in macroeconomic events.
In financial markets, especially crypto, traders often rely on confluence to improve accuracy. Confluence is the alignment of several factors—technical, emotional, and macroeconomic—that indicate the same trading outcome. It helps reduce risk and improve the reliability of trade entries or exits.
Top market participants understand that using a single tool in isolation is insufficient. By layering different analytical elements, they increase their chances of capitalizing on high-probability setups. This report outlines how seasoned traders effectively use technical, emotional, and macro-based confluence.
Technical Confluence in Trading Strategy
Technical confluence centers on price behavior, patterns, and indicators aligning on key charts. Traders focus on elements like market structure shifts, Fibonacci retracement levels, supply and demand zones, fair value gaps (FVGs), and order blocks when multiple tools show potential reversals or breakouts at similar price levels, the probability of success increases.
Key charts often referenced include BTC, ETH, and ETH/BTC. These act as macro guides for crypto traders. For instance, Bitcoin dominance (BTC.D) signals whether altcoins or Bitcoin are likely to outperform. A rising BTC.D often suggests stronger Bitcoin momentum, while a declining ratio could point to an altcoin surge.
Timeframes also play a role. High timeframes (HTFs), such as weekly or monthly, are often used to identify broader trend directions. Traders then refine setups using lower timeframes for precise entries. This multi-timeframe approach is essential for strengthening technical confluence.
Additionally, charts like USDT.D, TOTAL1, and TOTAL3 help identify capital flow across the market. When TOTAL1 or TOTAL3 reaches significant resistance or support zones simultaneously with Bitcoin or ETH, traders view that as a strong signal.
Using Non-Technical and External Confluence
Outside of charts, traders consider market psychology and geopolitical factors. These types of confluence often signal macro-level turning points. For example, sentiment extremes—either euphoria or panic—can indicate approaching market reversals.
Events like regulatory announcements, exchange outages, institutional buying or selling, or high-profile public endorsements can heavily influence sentiment. When such developments align with technical indicators, the resulting confluence is considered very strong.
Sharp spikes in volatility indexes such as BVOL, BVOL24, or the traditional VIX can also act as triggers. A VIX reading above 44 has historically marked key volatility shifts, indirectly affecting crypto markets due to risk-off or risk-on transitions.
Public sentiment also acts as an indicator. Widespread bullish chatter on social platforms or mainstream media coverage often occurs near local tops. Conversely, silence or bearish consensus is usually seen near market bottoms. This cyclical behavior provides another layer of external confluence.
Structuring Trades with a Confluence Checklist
Traders use a checklist when evaluating potential setups to simplify decision-making. Essential items include hidden liquidity zones, supply or demand imbalances, Fibonacci zones, market structure alignment, and confirmation from major charts like BTC and ETH.
Whether day traders or swing traders, we should strive to have at least five kinds of confluence in the area before taking a position in the result; this makes that particular trade much more valid. These elements are to mesh in a narrow price band and time frame. In the event that there is a lack of confluence, the professionals tend to pass up on the trade rather than forcing a position.
Retailing instruments, such as RSI, MACD, and trendlines, are useful extras most of the time. They are lagging indicators, but one can derive an advantage by learning how retail traders may respond to these indicators.
This will aim at integrating top notices from both institutional and retail players. When several measures concur in time series and markets, this is a more predictable trade hypothesis.
Traders learn to work with Confluence as an integral part of a structured system and gain knowledge of how to handle unstable markets and find more likely trades.
