Quarterly Theory ICT 04 SSMT 4Quarter Divergence

The Quarterly Theory ICT 04 SSMT 4Quarter Divergence tool identifies early-stage divergences between correlated assets within precise time structures to detect institutional manipulation and market reversals. It segments market behavior into four distinct phases—Accumulation, Manipulation, Distribution, and Continuation/Reversal—to pinpoint high-probability trade setups across various asset classes.

Usage

The indicator is designed to detect time-based divergences (Sequential SMT) between two correlated assets, such as EURUSD/GBPUSD or ES/NQ. This divergence occurs when both assets print a similar swing in a previous quarter, but only one asset breaks that level in the current quarter while the other fails to reach it.

Bullish Sequential SMT

1. In the previous quarter, both assets form a similar swing low.
2. In the current quarter, one asset breaks that low.
3. The correlated asset fails to reach the same low, preserving the structure. This indicates declining selling pressure and potential smart money accumulation.

Bearish Sequential SMT

1. In the previous quarter, both assets form a similar swing high.
2. In the current quarter, one asset breaks above that high.
3. The correlated asset fails to reach that high, remaining below it. This signals weakening bullish momentum and potential distribution before a price drop.

Details

The Sequential SMT (SSMT) technique is rooted in ICT methodology and Quarterly Theory. Unlike standard divergence indicators, it utilizes a granular temporal lens (Q1 through Q4) to validate price action. The tool identifies "engineered liquidity traps" by comparing price movement against specific time cycles. It is most effective when paired with a Precision Swing Point (PSP) on lower timeframes (5m–15m) to confirm a Market Structure Break (MSB). The indicator supports multiple cycle types, ranging from Yearly down to Micro (22.5 minute) increments, making it adaptable for different trading styles.

Settings

Logical Settings

• Quarterly Cycles Type: Selects the time segmentation method (Yearly, Monthly, Weekly, Daily, 90 Minute, or Micro).
• Symbol: The secondary asset to compare with the main chart asset.
• Pivot Period: Sensitivity of the pivot detection; smaller values increase responsiveness.
• Activate Max Pivot Back: Limits the number of historical pivots considered.
• Pivot Sync Threshold: Maximum bar difference allowed between pivots for comparison.
• Validity Pivot Length: Time window during which a divergence remains active.

Display Settings

• Show Cycle: Toggles the visual background/display of the current quarter.
• Show Cycle Label: Displays the quarter name (e.g., Q1, Q2) on the chart.
• Show Bullish/Bearish SMT Line: Draws lines connecting divergence points.
• Show Bullish/Bearish SMT Label: Toggles the text labels for detected signals.

Alert Settings

• Message Frequency: Options for All, Once Per Bar, or Per Bar Close.
• Time Zone Display: Adjusts the timestamp for alert messages.

FAQ

How do I interpret the different quarters? Under Quarterly Theory, Q1 is typically Accumulation, Q2 is Manipulation, Q3 is Distribution, and Q4 is Reversal or Continuation.

What assets work best with this tool? It works best on highly correlated pairs such as S&P500 (ES) with Nasdaq (NQ), or EURUSD with GBPUSD.

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