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SMT Divergence Trading Strategy XAUUSD XAUEUR

An SMT, or Smart Money Tool, identifies divergences between correlated currency pairs to determine which pair is stronger or weaker. It serves as a confluence tool for identifying trading opportunities. An SMT divergence occurs when one pair fails to make a new high or low while the other pair does. This signals that one pair is stronger and more likely to continue moving in the direction of the divergence. The document provides examples of SMT divergences between EUR/USD and GBP/USD, and XAUUSD and XAUEUR, where the diverging pair made larger price moves. SMT should only be used as a confirmation with other factors like price action and volume.

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raju
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280 views6 pages

SMT Divergence Trading Strategy XAUUSD XAUEUR

An SMT, or Smart Money Tool, identifies divergences between correlated currency pairs to determine which pair is stronger or weaker. It serves as a confluence tool for identifying trading opportunities. An SMT divergence occurs when one pair fails to make a new high or low while the other pair does. This signals that one pair is stronger and more likely to continue moving in the direction of the divergence. The document provides examples of SMT divergences between EUR/USD and GBP/USD, and XAUUSD and XAUEUR, where the diverging pair made larger price moves. SMT should only be used as a confirmation with other factors like price action and volume.

Uploaded by

raju
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

SMT

(Smart money Tool)

I decided to write this PDF because, by identifying SMT


divergences you gain a better insight on the stronger/ weaker
pair to trade in turn catching larger price moves.
Also, I will never take a trade based solely based on an SMT
divergence, I use it as a confluence tool!

SMT- (Smart Money Technique) is the first sign on manipulation

Manipulation invites opportunity.

A change in the state of delivery born from a crack in


correlation = opportunity 💎 💎

-What is an SMT?
An SMT (Smart Money Tool) is a crack in correlation between correlated
pairs,
I use SMT divergences when I trade FX pairs like EUR/USD, GBP/USD and
DXY
SMT’s can also be used with

-BTC/ETH
-XXXUSD/ DXY

-ES/YM/NQ

-XAUUSD/XAUEUR

Here is a chart of EUR/USD and GBP/USD, as we can see both of them


have the same anatomy

When EU makes a lower low so does GU, when EU makes a higher high
so does GU, so on and so forth. They both have the same structure

Now, as we can see here,


EU fails to make a lower low whereas GU does make a lower low.

This is an SMT Divergence, so if I seen this on a trading day I would


choose to take longs on EU rather than GU, because the SMT signals to
us that EU is the stronger pair

How I use SMT divergences:-


I use SMT divergences only as a confluence to my trades, so before I
would even check to see if an SMT is present I make sure 2 criteria are
met as always which is

-Price has tapped into a HTF PD array.


-A clear target.

Here is an annotated example


In both of these cases above I would choose to trade GU,

As in the bullish example it failed to make a lower low whereas EU did


(Shows GU strength for Longs)

In the bearish example it failed to make a higher high compared to EU


(Shows GU weakness for shorts)
Above Gu made 90pips
And Eu made 60pips

Some eg of XAUUSD with XAUEUR


Above XAUUSD is stronger made 200pips
and XAUEUR made 120pips

NOTE:- SMT is one of the confirmation to find manipulation move


Blindly don’t Take entry

Combine with PD Array and dealing range to Enter the


Trade

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