---
title: 'How To Use SMT Divergence - TTrades Fractal Model'
source: 'https://youtube.com/watch?v=-ocfPuD_oqE'
video_id: '-ocfPuD_oqE'
date: 2026-09-20
duration_sec: 811
channel: 'TTrades'
---

# How To Use SMT Divergence - TTrades Fractal Model

> Source: [How To Use SMT Divergence - TTrades Fractal Model](https://youtube.com/watch?v=-ocfPuD_oqE)

## Summary

This video explains how to use Smart Money Technique (SMT) as a confluence tool within a fractal trading model, emphasizing that SMT should only be applied after a valid model has formed. The presenter demonstrates reversal, continuation, and double SMTs with real TradingView examples, highlighting the importance of proper framework and intraday confirmation.

### Key Points

- **SMT as Confluence, Not a Standalone Signal** [00:16] — SMT is not used to force a model; it is used as confluence within a model. You first find a model, then check for SMT.
- **Definition of SMT** [00:33] — SMT is a divergence between correlated markets, e.g., S&P 500 makes a higher high while NASDAQ makes a lower low.
- **Applying SMT in the Fractal Model** [01:14] — Look for a candle 2 or candle 3 closure paired with a change in state of delivery on the lower timeframe, then reference the correlated market for SMT.
- **Reversal vs. Continuation SMT** [01:56] — Reversal SMT occurs between candle 1 and candle 2; continuation SMT occurs between candle 2 and candle 3.
- **Double SMT** [02:50] — A double SMT is when both reversal and continuation SMTs are present, providing stronger confluence.
- **Example: Reversal SMT on MQ** [03:17] — Candle 2 closure with change in state of delivery and reversal SMT with YM leads to expansion lower in candle 3.
- **Example: No SMT, Invalid Setup** [04:08] — A bullish candle 2 without SMT between candle 1 and 2, and no continuation SMT, invalidates the setup and takes out the low.
- **Trading Reversal SMTs** [05:04] — For reversal SMTs, wait for a model or framework; prefer continuation in candle 3, but if trading candle 2, ensure the candle supports expansion.
- **Framework First, Then SMT** [07:06] — Even if SMT exists, ignore it until the framework (e.g., hourly change in state of delivery) is confirmed.
- **SMT Does Not Guarantee Success** [08:33] — A valid setup with SMT can still fail; intraday confirmation (e.g., open low first, then trade higher) is necessary.
- **Continuation SMT on USD/CAD** [09:20] — No reversal SMT, but continuation SMT with dollar taking out previous high provides confluence for a move lower.
- **Continuation SMT Example** [10:32] — ES and NQ take out previous high while YM does not, indicating a divergence; intraday confirmation leads to a continuation lower.
- **Double SMT Example** [11:48] — Messy price action with both reversal and continuation SMTs; intraday confirmation and further continuation SMTs allow for trading opportunities.
- **Key Reminder** [12:58] — Never look for SMT first; always have a framework and model, then apply SMT as confluence.

### Conclusion

SMT is a powerful confluence tool when used correctly within a fractal model, but it requires a valid framework and intraday confirmation to be effective. Remember: model first, SMT second.

## Transcript

How's it going everyone? This is going to be a video over SMT within the fractal model.
Now it is important to note that SMT is not used to force yourself upon a model, but it is used as a confluence within a model. So I'm not going to randomly use SMT and then try to find a model within that. I'm going to first find a model and then see if it has SMT
for extra confluence. Let's get into the PDF. So what is SMT? SMT is a divergence between correlated markets. So for instance if I have the S&P 500 here or ES and NASDAQ here, those are
correlated markets. They should be moving in the same direction. However if they have a difference in structure, so for instance here, the S&P makes a higher high, while the NASDAQ makes a lower low,
that would be a divergence between correlated markets, also known as an S&T, and that is what we can use to give confluence to a reversal. So that is what an S&T is, how do we use it within
the fractal model? Within the fractal model, and this is what it looks like on the lower time frame, I'm going to be looking for a model, so a candle 2 or a candle 3 closure paired with a change in the state of delivery on the lower time frame, and then referencing that correlated market
to see if it has an SMT. So here you can see we have a candle 2 closure, we have a lower time frame change in the state of delivery. Only once I have a model that has formed do I look at the correlated market. Here you can see I can look at the correlated market and it has formed a lower
high, well we have formed a higher high. So I can go ahead and mark out that SMT on the lower time frame or as well on the higher time frame and that can give me a confluence to this reversal forming.
And that will be an SMT between candle 1 and candle 2. Now we can also have an SMT between candle 2 and candle 3 which is a continuation SMT. So this is a reversal SMT forming a reversal.
This is a continuation SMT as it's within the continuation. So here you can see, once again, we have a candle 2 closure, a change in the stage of delivery on the lower time frame, a valid model before we are looking for SMT.
Then we go ahead and take a look. We don't have SMT between candle 1 and candle 2, but we can still keep watching the correlated market. Here when we go to form this continuation, what do we do? We don't take out the high, but on a correlated market, we do take out the high.
So that is an SMT between candle 2 and candle 3, or a continuation. That can give us a confluence to trade this continuation lower and trust that this candle 2 can hold.
Now, we can also get a double SMT, or an SMT between candle 1 and 2, and between 2 and 3. So we have this reversal SMT, but we also have this continuation SMT.
Now once again, it's important that you don't just randomly look for SMTs. you need to have an actual model that is the foundation, and then you look for an SMT as a confluence. So, let's get into TradingView and go over a few examples.
So here we are in our first example and you can see we have a candle to closure with a change in the state of delivery and then we have a reversal SMT or an SMT with YM this is on MQ from candle 2 to candle 1
That gives us an extra confirmation that this can reverse here, and we can get an expansion lower in candle 3. Now why am I not looking at this candle 2 in a bullish scenario? Well because if
follow the low finally high we have not closed through the series of downclosed candles so they're only valid to look short in this scenario so let's see what happens here
you can see we do get that sell off to our targets and then we get a continuation in candle four let's continue ahead and see if we can find another example so here we have a candle two
closure bullish but let's see if it works out there is no smt between candle one and candle two does smt form between candle two and candle three well as we let this play ahead
it does not it invalidates the t-spot and then takes out the low now here we have an smt and you can see es and ym have not taken out this low while nq has but like i said i don't want
to randomly use smt without context so i'm going to wait for the candle closure and here you can see we make a new low and then it will update the smt it is in replay so it will be
a bit delayed but we have a change in the state delivery with smt once again let's wait for the closure so here we have a closure now right so a candle to closure with a change in the state delivery and now this smt with ym or this reversal is valid to look for long setups let's see what
happens we do trade higher into our previous target right this range high and we trade higher on reversal smts we want to first wait for a model or a framework you can trade candle two
so i prefer to look for a continuation in candle three so that would be a candle two closure with a change in the state of delivery and then i'll look for a smt so that is a divergence between the assets. So you can see here we are on NQ, in which case NQ took out this previous low.
But if we go to YM here, you'll notice YM does not take out this previous low. And you can see how it shows that SMT there. So taking a look at YM, what is YM here? This is actually a case where YM is a continuation SMT or an SMT between candle 3 and candle 2. It is a bit messy, and that's why
I would prefer to take a look at this on MQ and focus on the reversal SMP, as this candle 3 gives a much cleaner expansion. Let's get into another example. Now, one quick example here.
I did say that I do prefer to trade the continuation in candle 3 and candle 4, but I know many of you like to trade the reversal in candle 2. So how do we use SMP with that? Well, first, you're going to need a candle that actually supports expansion.
And that's what I mean by finding a setup that is valid before you look for SMT. Here you can see if we are reversing off of our previous save high, we do have a small wick which supports expansion. We have a change in the save delivery.
And then you can see that reversal SMT. So gold has its SMT with gold euro, gold pound here, and that supports expansion lower. So if you want to use S on candle 2 or within the reversal candle before the closure it has to support expansion lower Let see how this works out
You get that expansion to the EQ, it fails the EQ, and then takes out that previous lows or those targets down there. So hopefully that makes sense. If you are going to trade a reversal, you need to have the proper framework for it.
So here we are in another example. and this is what I want to show you with it needs to have a proper framework first before you look for SMT. If we're taking a look at this asset here gold you can see we do have a candle to closure.
Do we have an hourly change in the state of delivery? I find a high. I find a series of candles that made that high. We have yet to close below this level so we don't have a change in the state of delivery yet. So when looking at correlated assets yes I have an SMT here as the correlated
asset has made a lower high while gold has made a higher high but i do not care about that smt because i'm not finding smt and then applying a framework to it i'm finding a framework and then
applying smt to that so what would i need to wait for i'll need to wait for an hourly change in the state of delivery there you can see we do get that change in the state of delivery then it marks out the smt right so you notice we have to have the proper framework before we can look for an smt
there we do get expansion into the low, here retracement, and then a continuation into that further low. There are more advanced things to do if you do want to trade like this, but it just becomes a lot more difficult than it needs to be. So I like to keep it simple. If my model has not
formed, I do not look for SMT yet. Here we are on NQ. We have a candle to closure on the daily. We have an SMT and a change in the stage delivery. So we have a valid model to be looking lower here.
Let's see what happens. We open low first and then we trade higher and invalidate this setup. So what does this mean? Just because you see a valid setup and an S&T doesn't mean that it's
going to work. You still need that intraday confirmation that price is going to either open, form a new protected swing and trade lower, or open, make a new protected swing and then trade lower. If we look at how we form intraday here or the daily profile, we open low first and then
expand it higher, invalidating our EQ, thus invalidating the possibility for me to look for a bearish expansion. So just because you see SMT doesn't mean everything is going to work. Nothing works 100% of the time. So here we are in our next example. We are on USD CAD,
so I would be looking for the dollar for SMT. Here you can see we have a candle to closure, we have an alloy change in the state of delivery. There is no reversal SMT or SMT between candle one
and two. So the only way that we'd look for an SMT is between the correlated asset, right, on the continuation. Let's see what happens.
Here you can see now dollar has taken out this previous high. So there's an SMT between this current day's high and the previous day high with dollar. So this is a continuation S&T
showing that if we have the intraday confirmation, there's more confluence to see this to trade lower So you can see we reverse and we get a continuation lower into the targets below So the difference between a reversal SMT and a continuation SMT is a reversal SMT would form at the reversal or candle 1 and candle 2
A continuation SMT is an SMT between candle 2 and candle 3 or on the lower time frames this high and this high here which is marked out via my indicator. So let's take a look at another example.
So here's another example of a continuation S&T. So you can see we have a candle to closure. It is still a bullish closure, so we want to wait for more confirmation intraday just
because I don't have as much confidence in this setup. So let's let this play forward. You can see ES and NQ are already taking out this previous high. So does that tell us we
want to trade this lower? No, not yet. We still need that intraday confirmation before a reversal to Florence. And here you can see we get a sweep of this little consolidation,
a nice candle to closure, and that is an intraday reversal, and we're using this continuation SMT as a confluence for this move. We're seeing that YM hasn't taken out its previous day
high, while ES and MQ have. Let's see how this works out. We get a continuation lower, So you can see in just review, a continuation SMT is showing that the other assets, so if we go to ES or MQ, you can see that they are above their previous phase high.
While YM is not above that previous phase high, and there is a divergence at an important level. Here we are in our final example, and this is an example of a double SMT.
Now what is that? that is when we have a reversal between candle 2 and candle 1, or that reversal SMT, and a reversal between candle 2 and candle 3, or that continuation SMT. And you can see this price action here is
quite messy, and so having these double SMTs in terms of participating in this price or even looking for a setup. So let's see what happens. Once again, this alone does not mean that I'm
looking for a setup. I want to see that intraday confirmation, or the wick high of the daily form, before I can trade away from it. And here you can see intraday we form a new continuation SMT right there. So I could look for price to trade lower from here, or I could go down to a lower
timeframe and look for a further continuation. But there is where we would get to R. Let's see if we can get that. We do. And you can see we got a further continuation as we traded back up into this fair value gap and then formed another continuation out of that. So even if we missed
the intraday reversal, we could have got a continuation towards London or even into early New York before we expand lower. Now I hope this video was helpful and you understand what a
reversal versus a continuation SMT looks like within my fractal model and what a double SMT looks like. Once again, I want you to remember you don't just look for an SMT and then randomly
apply it to a model. You first want to have an actual framework and a model you are looking for then look to apply that SMT. With that said, I hope you enjoyed and I'll see you guys next week. Have a good one.