SMT Divergence

Jack said:
Bingo, so people hunting for SMT right now have the process backwards.. 'cart before the horse' as they say.
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Possibly the real issue is that some are still searching for the 'magic indicator', which clouds their ability to comprehend what has been stated many times by several people.
 
Expecting solid move up in Cable, so Long into poor UK trade Balance numbers
ie under AR Low
 
it must have heard me ;D
Obviously NFP in less than 3hrs may induce me to exit early

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I see the potential usefulness in watching the USDX when you're trading FX. So in order for me to understand the SMT divergence a little better, I created an indi for personal study. I'm a programmer so it's just how I can easily "experience" it.

Here's the 1h chart for the cable:

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Bottom indicator window is the OHLC chart for the $DXY (cash) and its divergence "ratio" is the purple/blue line overlayed. It goes down when there's a divergence, and is in the middle or in the upper region when it's correlated perfectly.

So obvious price isn't going to be 100% correlated, but it's relatively close most of the time. Lets zoom in to 15m.

bCKZPU.png


Note the big spike down at 10 and 13. That's divergence. The spikes up are, I guess, perfect correlation 8)

So at 10-11, we're diverged from price. DXY wasn't doing much, made slightly higher highs but we didn't get any lower lows. Noise IMO.

At 13-14, we're diverged. DXY made a bearish candle, and cable made a nice little doji. See here for a zoom in on that region:

jNIk5Iz.jpg


So I guess it can give off some signals, but I won't be relying on it 100%. It did do this nicely at the 1.52 level after taking out the highs of the Asian range and previous day so I guess there's that confluence.

ToS scaling is odd so it looks a bit weird. But just quickly manually backtesting this, it does have its share of accuracy when it's conflated w/ other tools.
 
I'll be interested to see how you go. I've only ever used SMT on M15 as a short term confirming tool in the AS.
 
the golden gun said:
No, it's just as precise as the OB, the key levels of course being the Open and Close. I love it, the concept is basically "damage control" by the players big enough to move the market (lookin at you CBs). Their positions go Negative, but luckily they ARE the market so they take it back down to BE and collapse positions. It works best when one side of the market clearly got caught with their pants down and will need to scramble to get out. That's my take on it, worth the study.
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rod178:

very precise!
 

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precise, yes indeed. Some Traders use similar setups to trade post News big moves. Something to investigate further.

Got my RR 1:1 by standing in front of a Steamroller pre NFP, I'll have to stop doing that.
 
rod178 said:
precise, yes indeed. Some Traders use similar setups to trade post News big moves. Something to investigate further.

Got my RR 1:1 by standing in front of a Steamroller pre NFP, I'll have to stop doing that.
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Just think of it like this. NFP is creating order blocks for next week. Whatever NFP does, you can be sure to capture most of it next week on a NFP block.
 
1H block on EJ with 23R potential.

(SL objectively placed 5 pips below the order block)

this is getting insane... not that it is easy to do real time... but it's there!
 

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the golden gun said:
1H block on EJ with 23R potential.

(SL objectively placed 5 pips below the order block)

this is getting insane... not that it is easy to do real time... but it's there!
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Your stops are 5 pips? Dang.
 
I have been starting to observe SMT and see if I find it useful.
Last night it helped me confirm trade direction and entry.
Tonight I noticed this Divergence/Convergence "Coffin".
I think it indicates that SM plans to take the Cable up out of the London Open.
We shall see.
 

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matty44 said:
So I slept in past LO and NYO, and awoke to find price back up in the area where the cable was accumulating shorts, and we saw that it ran the stops above the double top from friday when the markets opened yesterday. So expecting downward move in price, and still looking for completion of the MM sell model we are currently in. I saw price retracing up into OTE so that's when I started looking for SMT divergence. Cable had both USDX and correlated pair divergence...so I sold on the 5 min OTE after the initial LC retracement. Banked a quick 30 pips and I'm holding for the lows of the day to be taken out.

To your specific question, I use it a lot...not for every trade, but I probably should : )
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Just here from future dont mind me
 
the golden gun said:
One of the factors that contributes to my lack of faith is an experiment I did a few years ago. I found 3 brokers offering a feed for USDX and compared the highs and lows. To my dismay, I found that SMT divergence that had occurred on one broker, simply did not appear on another!

So exactly how much do you trust that USDX broker feed that you're using? ;)
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Just compare brokers feeds and trading view brokers such oanda , but charts differ from broker to broker
 
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