Building A Fibonacci Confluence Grid For SP500 Reference April 9Corey Rosenbloomupdated Apr 09, 2012TweetAt GET.com we maintain complete editorial integrity on our content & provide transparent & unbiased information. Companies don't pay us to include their products although we receive a compensation when you successfully apply to products from our partners. See how we make money here.At GET.com we maintain complete editorial integrity.If indeed the S&P 500 (and other US Indexes) retrace sharply lower, what potential short-term support areas might be good targets, at least from a Fibonacci Retracement standpoint?Let’s build a quick Fibonacci Confluence Support grid for the current S&P 500 and pinpoint these potential levels. Here’s the logic behind this chart before we discuss the levels. While many traders may draw a single Fibonacci Retracement Grid from a major swing low to a recent swing high, traders can benefit by drawing two or three Fibonacci Grids off previous swing lows – the result is the chart above which shows confluences or overlap with other retracement levels. With that in mind, I drew three simple Fibonacci Retracement grids starting with the October, November, and December 2011 swing lows – all ending with the recent April 2012 peak. IF price continues rallying and peaks soon above the 1,422 high, we’ll need to update the chart for the new – higher – Fibonacci levels. This grid is only in play IF price begins a steeper retracement while under the 1,400 key level.Now, let’s look at the levels.The first cluster develops at 1,340 which happens to be a very logical target beyond Fibonacci – it’s the March low (along with minor lows from February). Thus, 1,340 is a logical ‘initial target’ should a deeper retracement develop. In the event price eventually breaks under the 1,340 support cluster, the next lower Fibonacci Cluster forms with a “Triple Confluence” near 1,290 (just under the 1,300 ’round number’ reference). Interestingly enough, this triple cluster aligns near the October 2011 peak. Should the market fail to hold the 1,290/1,300 confluence, it opens the door to play for 1,250 then 1,200… but let’s not cross that bridge yet until we see initial levels broken first. Keep this reference grid handy over the next few weeks IF price does break – and target – lower levels from here (assuming the “Creeper Trend” higher does not reassert itself for a peak above 1,420 soon).Editorial Disclosure: Any personal views and opinions expressed by the author in this article are the author's own and do not necessarily reflect the viewpoint of GET.com. The editorial content on this page is not provided by any of the companies mentioned, and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are author's alone, not those of the companies mentioned, and have not been reviewed, approved or otherwise endorsed by any of these entities.