SMT Divergences V2 [OutOfOptions]

kelmarin

Smart Money Technique (SMT) Divergence is designed to identify discrepancies between correlated assets within the same timeframe. It occurs when two related assets exhibit opposing signals, such as one forming a higher low while the other forms a lower low. This technique is particularly useful for anticipating market shifts or reversals before they become evident through other Premium Discount (PD) Arrays.

This indicator works by identifying the highs and lows that have formed for an asset on the current chart and the correlated symbol defined in the settings. Once a pivot on either asset is formed, it checks if the pivot has taken liquidity as identified by the previous pivot in the same direction (i.e., a new high taking out a previous high). If this is the case and the corresponding asset has not taken a similar pivot, the condition is determined to be a potential valid divergence. The indicator will then filter out SMTs formed by adjacent candles, requiring at least one candle difference between the candles forming the SMT.

If the “Candle Direction Validation” setting is enabled, the indicator will further check both assets to ensure that for bullish SMTs, the last high on both assets was formed by down candle, and for bearish SMTs, the low was formed by an up candle. This check can often eliminate low-probability SMTs that are frequently broken.

The referenced chart shows divergence between Nasdaq (NQ) and S&P 500 (ES) futures, which are normally closely correlated assets that move in the same direction. The lines shown represent bullish and bearish divergences between the two when they are formed. As you can see from the chart, SMT Divergences may not always indicate a reversal, or a reversal might be just a short-term retrace. Therefore, SMT Divergences should not be used independently. However, in conjunction with other PD arrays, they can provide strong confirmation of a change in market direction.

Configurability:

• Pivot strength - Indicates how many bars to the left/right of a high for pivot to be considered, recommended to keep at 1 for maximum detection speed
  
• Candle Direction Validation - Additional SMT validation to filter out weak/low-probability SMTs be examining candle direction
  
• Remove Broken SMTs - Keeps the chart clean by removing broken (invalidate) SMTs from the chart, once price moves beyond the outmost edge of the SMT
  
• Work in Realtime - Enabled real-time mode for even faster detection of SMTs
  
• Line Styling for Bullish/Bearish SMTs - Ability to customize line style, color & width for bullish/bearish SMTs
  
• Label Control - Whether or not to show SMT label and if shown what font size & color should be used and if labels should include a tooltip containing information about the SMT
  

What makes this indicator different:

• When used on NQ/ES it will automatically detect the matching the corresponding ticker, i.e. if you have chart on NQU2025 it'll automatically match to ESU2025 and vice-versa. Works for mini/micro/continuous contract
  
• Unlike other SMT indicators, this indicator has an option to remove broken (no longer valid SMTs)
  
• Allows real-time detection of SMTs prior to the pivot being fully formed
  
• Allows validation of SMTs to only display high-probability SMTs, that are more likely to signal a possible reversal
  
• Includes alerting capability for both SMT creation and when the SMT is broken (invalidated)
  

kelmarin

Nota Keluaran

1. Added an option to Detect SMTs based on FVGs, formed when one of the indices taps an untapped FVG and the other doesn't
   
2. Added an option to Merge SMTs based of the same origin point to reduce number of lines on the chart. When a new SMT shares the same extreme edge as an older SMT, combine the two into one.
   
3. Added an option to prevent candle cross-over, when enabled, will align SMT to nearest non-violated liquidity on the current chart, prevents SMTs lines from cutting across candles
   

All 3 of the new options are enabled by default