SMT divergence (ICT says it stands for "smart money technique") compares two markets that normally move together. When one makes a new high or low and the other fails to, the disagreement suggests the move is weak and may reverse.
Bearish and bullish SMT
- Bearish SMT: at a high, one market makes a higher high while the correlated market makes a lower high. Buying pressure is not broad.
- Bullish SMT: at a low, one market makes a lower low while the correlated market makes a higher low. Selling pressure is not broad.
Common pairs
| Pair | Normal relationship | How to read it |
|---|---|---|
| ES and NQ (or YM) | Move together | Compare highs and lows directly |
| EUR/USD and GBP/USD | Move together | Compare highs and lows directly |
| EUR/USD and DXY | Move opposite | A higher high in EUR/USD should match a lower low in DXY |
| Gold and silver | Often move together | Compare highs and lows directly |
Using it
- Only look for SMT at a level that already matters: a liquidity sweep, a higher-timeframe PD array, inside a killzone.
- Compare the same timeframe and the same time on both charts.
- Treat SMT as confirmation of a sweep, not a signal by itself. You still want a change of character before entering.
- Trade the weaker market for a short (the one that failed to make the higher high), or the stronger one for a long.
Key takeaways
- SMT divergence is a disagreement between correlated markets at a key high or low.
- Bearish SMT: one market makes a higher high while the other makes a lower high; bullish SMT is the mirror at lows.
- Common pairs are ES and NQ, EUR/USD and GBP/USD, and EUR/USD against DXY.
- Use SMT as confirmation at a level that already matters, followed by a structure shift.