⚧ICT SMT Divergence
Divergence between ES and MNQ
SMT Divergence in Correlated Pairs
In the example above, we can see that correlated pair made a lower low, running its sellside liquidity below a previous low. Since pair 2 is correlated to pair , we should also expect to see it run its sellside liquidity below its previous swing low. It failed to do so. This indicates strength in pair 2 as it is unwilling to take its sellside liquidity. This divergence is a footprint of smart money and institutional accumulation. This crack in correlation indicates that pair is only going lower to take sellside liquidity before repricing higher, with institutional sponsorship behind the move. (Reverse for sellside delivery)
SMT Divergence in Inversely Correlated Pairs
In the example above, we can see that inversely correlated pair failed to run its sellside liquidity below a previous low. Since pair 2 is inversely correlated to pair , we should also expect to see it fail to run its buyside liquidity above its previous swing high. It did run the buyside liquidity, whilst pair failed to run its sellside liquidity. This indicates strength in pair as it is unwilling to go lower. This crack in correlation indicates that pair 2 is only going higher to take buyside liquidity before repricing lower.
Example 1: SMT Divergence between ES and MNQ
ES forms HigherHigh (HH) and MNQ forms LowerHigh (LH) at same time
Liquidity sweep in MNQ, So, you could take short after the sweep.
Example 2
Divergence in MNQ which caused liquidity sweep.
You could go to lower timeframe and enter long after the sweep.
Example 3
Liquidity sweep in NAS however, Order flow in S&P has switched to bearish mode.
Example 4
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