Fibonacci cluster, confluence, convergence or Potential Reversal Zone
Using combination of retracements, projections and extensions we can build a Fibonacci cluster also referred as Fibonacci confluence, convergence or Potential Reversal Zone. Closer and more lines from different measurements stronger PRZ, meaning higher probability it will work as support or resistance level and will allow a trader to enter into low risk and high probability trade.
In practice we look for minimum 2 Fibonacci price relationships coming together with a relatively tight range. When a price enters the PRZ we expect that this area will stop the prior market move and act as Support or Resistance. We observe the price behavior at this level, a trigger that will tell us to enter the market.
Similar to Fibonacci price measurements we work on Fibonacci time measurements. Time clustering will allow us to identify time when the price hit the support/resistance level and retrace.
Fibonacci measurements and creation of the price and time clusters deserve a separate post.