How I use #SMT Divergences🧵
What is SMT?
-An SMT (Smart Money Tool) is a crack in correlation between correlated pairs
-I use SMT divergences when I trade forex pairs like EUR/USD, GBP/USD and DXY
-This gives me an indication of the stronger pair to trade
-I will give a rundown of an SMT now!
-An SMT (Smart Money Tool) is a crack in correlation between correlated pairs
-I use SMT divergences when I trade forex pairs like EUR/USD, GBP/USD and DXY
-This gives me an indication of the stronger pair to trade
-I will give a rundown of an SMT now!
Step 1:
-Find two correlated pairs and have the 15m timeframe open, let's use EU and GU as an example!
-Find two correlated pairs and have the 15m timeframe open, let's use EU and GU as an example!
Step 2:
-Mark out your liquidity lines, so for us we will be using 15m highs/lows.
-Mark out your liquidity lines, so for us we will be using 15m highs/lows.
Step 3:
-Wait for one pair to take out the liquidity level, for example in this picture GU takes out the liquidity while EU doesn't.
-Wait for one pair to take out the liquidity level, for example in this picture GU takes out the liquidity while EU doesn't.
Step 4:
-So now that we see that GU takes out a low while EU doesn't indicate that order flow is bullish. So that means when GU does a liquidity grab, there's a high chance it will reverse. This is called an SMT Divergence.
-So now that we see that GU takes out a low while EU doesn't indicate that order flow is bullish. So that means when GU does a liquidity grab, there's a high chance it will reverse. This is called an SMT Divergence.
Step 5:
-Look for entry models on GU's liquidity grab to go long.
-Look for entry models on GU's liquidity grab to go long.
Live Example:
-Notice how EU failed to take out a 15m high while GU did, this indicated that GU's liq grab had a high chance of playing out.
-Notice how EU failed to take out a 15m high while GU did, this indicated that GU's liq grab had a high chance of playing out.
THANKS TO: @I_Am_The_ICT
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