SMT secret smart money signal - All you need to know

[cryptohog]

Hey whats up guys, in this post I want to show you how I use SMT divergence in my own trading to filter fake breaks and catch precise reversals. This is one of those things most traders never really dig into. Once you see it properly, you will not be able to unsee it.
It was popularized by ICT, but it is essentially Dow theory through a bit different perspective.

What is SMT (Smart Money Tool )
It's a crack in correlation between two markets that normally move together.
One market takes the high or low. The correlated market does not. That difference is SMT divergence. And that why sometimes it's enough if only one instrument from those two highly correlated takes low and other doesn't.

Before SMT we need correlation.
Some markets like to move together. They will never be perfectly identical, especially on the lower timeframes, but the general swing structure is similar.

• EURUSD & GBPUSD
• AUDUSD $ NZDUSD
• XAUUSD & XAGUSD
• BTCUSD & ETHUSD
• NQ & ES & YM

You can find some more variations like EURJPY & GBPJPY etc.. But if you want to focus on precision your watchlist should contain just a few instruments. Not 20 unless you are position trader and your entry timeframe is Daily.

Bearish SMT on positively correlated instrument's
One market makes a higher high. The other prints a lower high or equal highs.
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Bullish SMT. on positively correlated instrument's
One market makes a lower low. The other makes a higher low or equal low.
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Negative SMT Correlation
Its same only one pair is inverted which is DXY.
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We could say that in the Forex it would basically every currency with DXY. But No !!

️ Dont use DXY for correlation with AUDUSD and NZDUSD. Yes obviously they are affected by the DXY (Dollar) movement, but as these two are not included in the DXY. They are lagging. Yes at some point DXY affects them too, but just don't use them for the SMT. as
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SMT is like a quiet signal from smart money. One market shows the truth. The other is used as a trap. After this trap mostly sharp expansion happens. Its a signal for a timing that its ready.

EURUSD and GBPUSD Example
GU - just shallow manipulation but creates clean OB
EU - Deeper manipulation but OB created later.
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️SMT is not a strategy
On its own that does not give you an edge. The key is what it says about the willingness of big players to push price. If DXY runs above a previous highs and EUR and GBP refuses to take out its opposite lows , that is lack of commitment to continue that move. Someone is offside. Dumb money sells late or buys late, smart money quietly positions on the other side.

EURUSD and DXY Example
DXY makes higher high above monthly highs, EUR fails to take lows. Correlation disconnected. EUR is stronger and if its within CLS range reversal can occur.
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what does GBP at the same moment?
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also failed to make a lower low hence is stronger than USD. If it aligns with the strategy reversal is confirmed.

[Nahid Hossen]

Smart money signals often reveal early trends—worth watching closely.