SMT (DXY) DIVERGENCES

The SMT (DXY) DIVERGENCES indicator identifies Smart Money Technique (SMT) divergences by comparing the price action of the current chart symbol with up to two external correlated or uncorrelated instruments. It highlights potential market reversals or trend shifts by detecting discrepancies in the slopes of swing highs and swing lows across multiple assets.

Usage

The Usage section focuses on identifying price discrepancies between correlated assets. For example, if EURUSD is making a lower low while the DXY (US Dollar Index) is also making a lower low (instead of a higher high), a bullish SMT divergence is formed.

• Bullish SMT (+ SMT): Occurs when the lows of the chart symbol slope in the opposite direction of the comparison symbol’s lows. This is often used to identify potential accumulation or bullish reversals.
• Bearish SMT (- SMT): Occurs when the highs of the chart symbol slope in the opposite direction of the comparison symbol’s highs. This can signal distribution or potential bearish reversals.
• Correlation Inversion: If comparing instruments that naturally move in opposite directions (e.g., EURUSD and DXY), users can use the "Invert Symbol" feature to align their price action for easier divergence detection.

Details

The indicator utilizes pivot-based logic to confirm swing highs and swing lows. It calculates the slope between the two most recent pivots on both the primary and comparison symbols. If the slopes point in mathematically opposite directions, a divergence is flagged.

The script features adaptive swing lengths that adjust based on the active timeframe (e.g., Daily, 4H, 1H, or lower intervals) to ensure the pivots remain relevant to the current market volatility and trend structure.

Settings

Symbol

• Use Sym 1/2: Enable or disable comparison with the first or second external symbol.
• Sym 1/2: Define the ticker for comparison (defaults: TVC:DXY and OANDA:GBPUSD).
• Invert Symbol: Flips the price action of the comparison symbol (1/price) to account for negative correlations.

Logic Setting

• Show Historical: Toggle whether to keep historical divergence lines and labels on the chart or only show the most recent occurrence.
• Labels Color: Adjust the color of the text annotations.

Style Options

• Style Options: Select from predefined color schemes including "TLAB", "Standard", "Monochrome", or a "Custom" profile.
• Line Style: Choose between solid, dashed, or dotted lines for the divergence connectors.
• Show SMT UP/DOWN: Individually enable or disable the display of bullish or bearish divergence markers.

FAQ

How do I access SMT (DXY) DIVERGENCES?

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

Can I use this for crypto or stocks?

Yes, you can input any symbol in the "Comparison Symbol" settings, such as BTCUSD vs. ETHUSD or SPY vs. QQQ, to detect divergences between correlated assets in any market.

Why are some divergences not appearing?

The indicator relies on specific pivot lengths that change based on the timeframe. Ensure you are on a supported timeframe (Daily, 4H, 1H, 15m, 5m) for optimal pivot detection and slope calculation.