SMT Divergence NQ and ES

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We're at a critical juncture in the markets right now. The recent price action has brought us into key demand zones, and we are seeing signs of potential bullish divergence between indices. One market has swept liquidity while the other is holding higher lows—classic SMT divergence.

The daily FVG levels are now being tested, and if buyers step in here, we could see a strong reaction. This is an area where liquidity and previous structure align, making it a prime spot for a bounce. A confirmation candle or a reclaim of key levels would strengthen the bullish case.

Patience is key. If the market holds this level and starts pushing up with conviction, we could be looking at a solid reversal play. Keep an eye on intraday reactions and liquidity grabs—this is where the next move will be decided.

Stay sharp.

Lord Medz
Note
SMT (Smart Money Theory) in Simple Terms

Imagine two friends running a race—one speeds ahead, while the other lags behind. Normally, they should move together, but if one makes a new high while the other doesn’t, something is off. This mismatch is what traders call SMT (Smart Money Tool or Smart Money Theory) Divergence.

In trading, SMT compares different markets (like Bitcoin vs. NASDAQ) or similar assets (like S&P 500 vs. Dow Jones). When one makes a higher high, but the other doesn’t—or one makes a lower low while the other holds up—it’s a sign that big money (institutions) might be shifting direction.

🔹 Example:

Bitcoin breaks a new high, but NASDAQ doesn’t → Possible weakness (distribution).
S&P 500 makes a lower low, but NASDAQ holds → Potential bounce (accumulation).

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