SMT Divergence x outofoptions

The SMT Divergence x outofoptions tool identifies high-probability reversal and continuation signals through intelligent correlation analysis between related markets. By comparing price action divergences across correlated instruments, it reveals hidden market dynamics and institutional-level insights directly on your chart.

Usage

The SMT Divergence indicator is used to spot Smart Money Tool (SMT) divergences, which occur when two highly correlated assets (e.g., S/P 500 and Nasdaq) fail to mirror each other's highs or lows.

• Bullish SMT (+SMT): Occurs when one asset makes a lower low while the correlated asset makes a higher low. This often signals institutional accumulation.
• Bearish SMT (-SMT): Occurs when one asset makes a higher high while the correlated asset makes a lower high. This often signals institutional distribution.

Traders can use the "SMT Validation" setting to ensure the divergence is confirmed by candle direction, filtering out noise in lower timeframes. The indicator also features automated line management to remove "broken" divergences when price moves past the identified levels, keeping the workspace clean.

Details

SMT divergence is a core concept in institutional trading styles, representing a "crack" in correlation. When correlated assets diverge at key liquidity levels, it suggests that one market is being manipulated or supported by large-scale orders that haven't yet affected the other market. This indicator automates the process by requesting data from a secondary ticker (via the request.security function) and comparing its pivot points with the current chart in real-time.

Settings

SMT Divergence

• Enable SMT: Toggles the visibility and calculation of the divergence lines and labels.
• SMT Ticker: The correlated instrument to compare against (e.g., CME_MINI:ES1! for S&P 500 futures).
• SMT Validation: When enabled, validates SMT entries based on candle direction to filter for higher probability setups.
• Remove Broken SMTs: Automatically deletes divergence lines if the price breaches the identified level.
• Label Size: Adjusts the size of the +SMT and -SMT labels on the chart.
• Visual Styles: Options to customize color, line style (Solid, Dotted, Dashed), and line width for both bullish and bearish signals.

Alerts

• +SMT Formed: Enables alerts when a bullish divergence is detected.
• -SMT Formed: Enables alerts when a bearish divergence is detected.
• Alert Message: A customizable text area to define the content of the triggered alerts using placeholders.

FAQ

How do I use the SMT Divergence x outofoptions?

To use the tool, apply it to your chart and select a highly correlated asset in the settings (e.g., if trading NQ, select ES as the SMT Ticker). Look for the +SMT or -SMT labels to identify potential reversal zones.

What markets does this work best on?

This indicator is most effective on highly correlated pairs such as ES/NQ, EURUSD/GBPUSD, or BTC/ETH.

How can I access SMT Divergence x outofoptions?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.