SMT Divergence ICT 02 [TradingFinder] Smart Money Technique SMC

🔵Introduction

SMT Divergence (Smart Money Technique Divergence) is a price action-based trading concept that detects discrepancies in market behavior between two assets that are generally expected to move in the same direction. Rooted in ICT (Inner Circle Trader) methodology, this approach helps traders recognize subtle signs of market manipulation or imbalance, often ahead of traditional indicators.

The core idea behind SMT divergence is simple: when two correlated instruments—such as currency pairs, indices, or assets from the same sector—start forming different swing points (highs or lows), this can reveal a lack of confirmation in the trend. Such divergence is often a precursor to a price reversal or pause in momentum.

This technique works effectively across various markets including Forex, stocks, and cryptocurrencies. It’s particularly valuable when used alongside concepts like liquidity sweeps, market structure breaks (MSBs), or order block identification.

In advanced use cases, Sequential SMT helps uncover patterns of alternating divergences across sessions, often signaling engineered liquidity traps before price reacts.

When combined with the Quarterly Theory—which segments market behavior into Accumulation, Manipulation, Distribution, and Continuation/Reversal phases—traders gain insight not only into where divergence happens, but when it's most likely to be significant within the market cycle.



Bullish SMT:

Bullish SMT Divergence occurs when one asset prints a higher low while the correlated asset forms a lower low. This asymmetry often suggests that the downside move is losing strength, hinting at a potential bullish shift.




Bearish SMT:

Bearish SMT Divergence is formed when one asset creates a higher high, while the second asset fails to confirm by printing a lower high. This typically signals weakening bullish pressure and the possibility of a reversal to the downside.




🔵How to Use

The SMT Divergence indicator is designed to detect imbalances between two positively correlated assets—such as major currency pairs, indices, or commodities. These divergences often indicate early signs of market inefficiency or smart money manipulation and can help traders anticipate trend shifts with higher precision.

Unlike traditional divergence indicators or earlier versions of this script, this upgraded version does not rely solely on consecutive pivot comparisons. Instead, it dynamically scans all available pivots within the chart to identify divergences at any structural level—major or minor—across the price action. This broader detection method increases the reliability and frequency of meaningful SMT signals.

Moreover, when integrated with Sequential SMT logic, the indicator is capable of identifying multiple divergence sequences across sessions. These sequences often signal engineered liquidity traps and can be mapped within the Quarterly Theory framework, allowing traders to pinpoint not just the presence of divergence but also the phase of the market cycle it appears in (Accumulation, Manipulation, Distribution, or Continuation).


🟣Bullish SMT Divergence

This signal occurs when the primary asset forms a higher low, while the correlated asset forms a lower low. This pattern implies weakening bearish momentum and a potential shift to the upside.

If the correlated asset breaks its previous low but the primary asset does not, this divergence suggests absorption of selling pressure and possible accumulation by smart money—making it a strong bullish signal, especially when aligned with a favorable market phase (e.g., the end of a manipulation phase in Q2).




🟣Bearish SMT Divergence

This signal occurs when the primary asset creates a higher high, while the correlated asset forms a lower high. This mismatch indicates fading bullish momentum and a potential reversal to the downside.

If the correlated asset fails to confirm a breakout made by the main asset, the divergence may point to distribution or exhaustion. When seen within Q3 or Q4 phases of the Quarterly Theory, this pattern often precedes sharp declines or fake-outs engineered by smart money




🔵Settings

⚙️Logical Settings

Symbol: Choose the secondary asset to compare with the main chart asset (e.g., XAUUSD, US100, GBPUSD).

Pivot Period: Sets the sensitivity of the pivot detection algorithm. A smaller value increases responsiveness to price swings.

Activate Max Pivot Back: When enabled, limits the maximum number of past pivots to be considered for divergence detection.

Max Pivot Back Length: Defines how many past pivots can be used (if the above toggle is active).

Pivot Sync Threshold: The maximum allowed difference (in bars) between pivots of the two assets for them to be compared.

Validity Pivot Length: Defines the time window (in bars) during which a divergence remains valid before it's considered outdated.

🎨Display Settings

Show Bullish SMT Line: Draws a line connecting the bullish divergence points.

Show Bullish SMT Label: Displays a label on the chart when a bullish divergence is detected.

Bullish Color: Sets the color for bullish SMT markers (label, shape, and line).

Show Bearish SMT Line: Draws a line for bearish divergence.

Show Bearish SMT Label: Displays a label when a bearish SMT divergence is found.

Bearish Color: Sets the color for bearish SMT visual elements.

🔔Alert Settings

Alert Name: Custom name for the alert messages (used in TradingView’s alert system).

Message Frequency:

• All: Every signal triggers an alert.
  
• Once Per Bar: Alerts once per bar regardless of how many signals occur.
  
• Per Bar Close: Only triggers when the bar closes and the signal still exists.
  

Time Zone Display: Choose the time zone in which alert timestamps are displayed (e.g., UTC).

Bullish SMT Divergence Alert: Enable/disable alerts specifically for bullish signals.

Bearish SMT Divergence Alert: Enable/disable alerts specifically for bearish signals


🔵Conclusion

The SMT Plus indicator offers a refined and powerful approach to detecting smart money behavior through divergence analysis between correlated assets. By removing the limitations of consecutive pivot comparisons and allowing for broader structural detection, it captures more accurate and timely signals that often precede major market moves.

When paired with frameworks like Sequential SMT and the Quarterly Theory, the indicator not only highlights where divergence occurs, but also when in the market cycle it's most likely to matter. Its flexible settings, customizable visuals, and integrated alert system make it suitable for intraday scalpers, swing traders, and even long-term macro analysts.

Whether you're using it as a standalone decision-making tool or combining it with other ICT concepts, SMT Plus gives you an edge in recognizing manipulation, timing reversals, and staying in sync with the real market narrative—not just the chart.