Dangstrat

@Dangstrat

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Thread on SMT Divergence and How To Use It

Using SMT between pairs & DXY for confluence

&
SMT stands for Smart Money Tool.

For Fx I trade GU/EU & for Indices I trade ES so im

watching these pairs along with DXY & NQ/YM as well
for SMT Divergences and also EURGBP to find the
stronger/weaker pair between GU/EU.

Separate the SMT Divergence between fx and indices.

For Fx: Look for the divergence to occur between

pairs ( $GBPUSD/ $EURUSD) or between the pairs
with $DXY.

For Indices: Look for the divergence to occur between

pairs ( $ES/ $NQ/ $YM) or between the pairs with
$DXY.

There is a Bullish SMT Divergence and a Bearish

SMT Divergence. They can happen on all timeframes
and there are high probability SMT divergences and
low probability SMT divergences and I will discuss the
difference.
A Bullish SMT Divergence occurs when liquidity has
been raided, then between the pair one makes a lower
low while the other makes a higher low which leads to
an expansion move higher. The divergence in price
action can signal a bullish reversal.

Here are examples of a Bullish SMT Divergence

between pairs:
GU makes higher low / EU makes lower low
ES makes lower low / NQ makes higher low
Example of a EU Bullish SMT Divergence with DXY:

Dollar is supposed to move inversely with gu/eu &

indices. In this example EU makes a lower lower
which means DXY should make a higher higher.
Because DXY made a lower high this is also a SMT
Divergence.
A Bearish SMT Divergence Occurs when liquidity has
been raided, then between the pair one makes a
higher high while the other makes a lower high which
leads to an expansion move lower. The divergence in
price action can signal a bearish reversal.
Here are examples of a Bearish SMT Divergence
between pairs:
GU makes higher high / EU makes lower high
ES makes lower high / NQ makes higher high
Example of GU Bearish SMT Divergence with DXY:

Dollar is supposed to move inversely with gu/eu and

indices. In this example GU makes a higher high
which means DXY should make a lower low. Because
DXY made a higher low this is also an SMT
Divergence
These divergence in price action between pairs or
pairs between dollar can potentially be the start of a
Smart Money Reversal based on other contexts which
I will discuss.
High probability SMT Divergences occur during
killzones/macos after there has been a significant raid
on liquidity with clear draw on liquidity. If you see an
SMT Divergence happen make sure there's LRLR
conditions.

Low probability SMT Divergences occur outside of

killzones and when there hasn't been any raids on
liquidity. HRLR conditions will also cause SMT
Divergences to fail.

LRLR vs HRLR

Here is an example of Bullish high probability SMT

Divergences including context.

Context: PO3 as narrative with Asia range as

accumulation. Asia low gets raided during LOKZ which
is manipulation. SMT Divergence starts the reversal
after raid. Then mss starts expansion to DOL.
Look at how time comes into play. At the start of LOKZ
liquidity gets raided then at the open, an SMT
Divergence occurs when GU makes a higher low than
EU. After, theres a MSS & it gives BRK/FVG entries
for longs to start the expansion move. This is a
textbook A+ setup.
If MSS happens near the end of LOKZ then look for
the expansion move to happen during NYKZ. The
SMR (smart money reversal) where SMT Divergence
occurs. Then you're looking for mss/bos for
accumulation/distribution where fvg/brk/obs etc. occur.

Here is how SMT Divergences factor into my favorite

Buy/Sell Model
For bullish SMT Divergences typically the pair that
makes the higher low tend to be the stronger one as
the higher lower shows relative strength so that's the
pair you want to long. You can also compare
displacement in price to find the stronger pair.

For bearish SMT Divergences typically the pair that

makes the lower high tend to be the weaker one as
the lower high shows relative weakness so that's the
pair you want to short. You can also compare
displacement in price to find the weaker pair.

If the stronger/weaker pair doesn't give you entry to

long/short then I will look at the other pair for entry.
Always look at DXY for confluence when trading.

Here is my Linktree to become a Lifetime or Gold

Member! Sign up for Lifetime Membership to get my
trade signals. I am currently doing a 100k challenge
live.

https://linktr.ee/dangstrat
More on my Discord

If you want to improve your discipline & trading edge

you can purchase my Trading Journal Template to
easily track all of your trades!

https://dangstratify.gumroad.com/l/hqpkb

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