Get started

EUR/USD_SPT - EUR/USD

No trades
See on Supercharts
Overview News
Ideas
Discussions Seasonals Economic Calendar

EURUSD_SPT trade ideas

Euro H4 | Pullback resistance at 50% Fibonacci retracementThe Euro (EUR/USD) is rising towards a pullback resistance and could potentially reverse off this level to drop lower. Sell entry is at 1.1426 which is a pullback resistance that aligns with the 50.0% Fibonacci retracement. Stop loss is at 1.1583 which is a level that sits above a swing-high resistance. Take profit is at 1.1274 which is a multi-swing-low support that aligns close to the 38.2% Fibonacci retracement. High Risk Investment Warning Trading Forex/CFDs on margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you. Stratos Markets Limited (tradu.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Europe Ltd (tradu.com): CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 63% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. Stratos Global LLC (tradu.com): Losses can exceed deposits. Please be advised that the information presented on TradingView is provided to Tradu (‘Company’, ‘we’) by a third-party provider (‘TFA Global Pte Ltd’). Please be reminded that you are solely responsible for the trading decisions on your account. There is a very high degree of risk involved in trading. Any information and/or content is intended entirely for research, educational and informational purposes only and does not constitute investment or consultation advice or investment strategy. The information is not tailored to the investment needs of any specific person and therefore does not involve a consideration of any of the investment objectives, financial situation or needs of any viewer that may receive it. Kindly also note that past performance is not a reliable indicator of future results. Actual results may differ materially from those anticipated in forward-looking or past performance statements. We assume no liability as to the accuracy or completeness of any of the information and/or content provided herein and the Company cannot be held responsible for any omission, mistake nor for any loss or damage including without limitation to any loss of profit which may arise from reliance on any information supplied by TFA Global Pte Ltd. The speaker(s) is neither an employee, agent nor representative of Tradu and is therefore acting independently. The opinions given are their own, constitute general market commentary, and do not constitute the opinion or advice of Tradu or any form of personal or investment advice. Tradu neither endorses nor guarantees offerings of third-party speakers, nor is Tradu responsible for the content, veracity or opinions of third-party speakers, presenters or participants.
Short
by Tradu
Market Analysis: EUR/USD Trims GainsMarket Analysis: EUR/USD Trims Gains EUR/USD extended losses and traded below the 1.1250 support. Important Takeaways for EUR/USD Analysis Today - The Euro struggled to clear the 1.1380 resistance and declined against the US Dollar. - There is a key bearish trend line forming with resistance at 1.1240 on the hourly chart of EUR/USD at FXOpen. EUR/USD Technical Analysis On the hourly chart of EUR/USD at FXOpen, the pair failed to clear the 1.1380 resistance. The Euro started a fresh decline below the 1.1300 support against the US Dollar. The pair declined below the 1.1250 support and the 50-hour simple moving average. Finally, the pair tested the 1.1200 level. A low was formed at 1.1196 and the pair is now consolidating losses. The pair is showing bearish signs, and the upsides might remain capped. There was a minor increase toward the 23.6% Fib retracement level of the downward move from the 1.1381 swing high to the 1.1196 low. Immediate resistance on the upside is near the 1.1240 level. There is also a key bearish trend line forming with resistance at 1.1240. The next major resistance is near the 1.1290 zone and the 50-hour simple moving average or the 50% Fib retracement level of the downward move from the 1.1381 swing high to the 1.1196 low. The main resistance sits near the 1.1335 level. An upside break above the 1.1335 level might send the pair toward the 1.1380 resistance. Any more gains might open the doors for a move toward the 1.1420 level. On the downside, immediate support on the EUR/USD chart is seen near 1.1200. The next major support is near the 1.1165 level. A downside break below the 1.1165 support could send the pair toward the 1.1120 level. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
by FXOpen
1
EUR/CAD Short, USD/JPY Neutral, AUD/JPY Neutral and EUR/USD LongEUR/CAD Short Minimum entry requirements: • If structured 1H continuation forms, 1H risk entry within it. USD/JPY Neutral Minimum entry requirements: • 1H impulse down below area of value. • If tight non-structured 15 min continuation follows, 5 min risk entry within it if the continuation is structured on the 5 min chart or reduced risk entry on the break of it. • If tight structured 15 min continuation follows, reduced risk entry on the break of it or 15 min risk entry within it. Minimum entry requirements: • If structured 1H continuation forms, 1H risk entry within it. AUD/JPY Neutral Minimum entry requirements: • 1H impulse down below area of value. • If tight non-structured 15 min continuation follows, 5 min risk entry within it if the continuation is structured on the 5 min chart or reduced risk entry on the break of it. • If tight structured 15 min continuation follows, reduced risk entry on the break of it or 15 min risk entry within it. Minimum entry requirements: • If structured 1H continuation forms, 1H risk entry within it. EUR/USD Long Minimum entry requirements: • 1H impulse up above area of interest. • If tight non-structured 15 min continuation follows, 5 min risk entry within it if the continuation is structured on the 5 min chart or reduced risk entry on the break of it. • If tight structured 15 min continuation follows, reduced risk entry on the break of it or 15 min risk entry within it.
by StewySongs
EURUSDEUR/USD Interest Rate Differential and Fundamental Outlook for May 2025 Interest Rate Differential The European Central Bank (ECB) has been easing monetary policy, cutting key rates by 25 basis points in April 2025 to a Main Refinancing Operations Rate of 2.4% and Deposit Facility Rate of 2.25%. This marks the sixth consecutive rate cut as inflation in the Eurozone moves toward the ECB’s 2% target. The Federal Reserve (Fed) has kept the federal funds rate steady at 4.50% as of March 2025, with expectations of only two rate cuts during 2025 amid persistent inflation and solid economic growth in the US. This results in a significant interest rate differential favoring the US dollar, with the Fed rate roughly 2 percentage points higher than the ECB’s main rate. Fundamental Data and Events in May 2025 Eurozone Economic Growth: The Eurozone showed better-than-expected growth of 0.4% in Q1 2025, supported by strong domestic demand, but downside risks remain due to trade uncertainties and slowing global demand. Inflation: German headline inflation eased to 2.1% in April, while France’s inflation remained steady at 0.8%. The ECB expects inflation to return to target by year-end, justifying continued easing. US Economy: The US economy contracted unexpectedly by 0.3% annualized in Q1 2025, partly due to import spikes ahead of tariffs. Non-farm payrolls and unemployment data in early May will be closely watched for Fed policy signals. Trade Optimism: Growing optimism about easing US trade tensions with India, Japan, South Korea, and China has supported the US dollar recently, limiting EUR/USD upside. ECB Guidance: The ECB remains data-dependent and cautious, refraining from committing to a fixed rate path amid “exceptional uncertainty,” largely related to trade policies. EUR/USD Directional Bias for May 2025 Factor Impact on EUR/USD ECB rate cuts and easing bias Bearish for EUR Fed’s higher rates and fewer cuts Bullish for USD Eurozone modest growth and easing inflation Mild support for EUR, but limited US economic contraction and trade optimism Mixed; weak US data could support EUR temporarily Trade tensions easing Supports USD strength, weighing on EUR/USD Overall Bias: The interest rate differential and Fed’s relatively hawkish stance favor the US dollar, exerting downward pressure on EUR/USD in May. Despite some positive Eurozone data, the ECB’s easing and trade optimism supporting the dollar suggest EUR/USD will likely trade sideways Summary The Fed’s 4.50% rate vs. ECB’s 2.4% rate creates a strong yield advantage for the US dollar. The ECB’s continued easing cycle contrasts with the Fed’s cautious but higher rate stance. Eurozone growth and inflation are improving but remain fragile amid trade uncertainties. US economic data and trade deal developments in May will be key drivers. EUR/USD is expected to face selling pressure or consolidation around demand floor , with downside risks if US data remains resilient.
by Shavyfxhub
EUR/USD Bearish Setup Recent negative US GDP data and rising inflation risks—partly driven by potential tariff policies—suggest recession fears are growing. Yet, current monetary policy still favors a stronger dollar in the short term. On the daily timeframe, EUR/USD has hit a key TPO resistance zone and faced a strong rejection. Price is now moving toward the 1.0927 area, which aligns with a significant fair value zone based on volume profile. Bears may take control if this momentum continues.
Short
by MasoudEskandari
1
EUR/USD short: WIll Moby Dick sink the global economy?Hello traders The allegory of our current global economy and Moby Dick, the rare white whale, hunted by the obsessed Captain Ahab, is not one I am writing about in a light hearted manner. A refresher: Moby Dick(China) bites off Captain Ahab's(USA) leg and is subsequently relentlessly hunted by the obsessed captain who wants revenge. At the conclusion of the novel, Captain Ahab is oh, so close to killing the elusive whale but gets entangled in the rope of the harpoon and is dragged down to his own watery death by the wounded whale. Moral of the story? Moby Dick is a classic American novel and China has not eaten the USA's lunch. I do not see any winners in this tariff war but rather the distinct possibility of a global recession and potential melt down like 2008/2009. At the heart of this conundrum is DJT's obsession with trade imbalance going back to his first term. The irony being, the 2018 trade imbalance was the biggest ever under his watch. I love these magnificent United States more than anything but let's get real. DJT won his second term on the persistent high inflation after COVID-19 and immigration not because we, as privileged Americans are suffering as the richest country on the planet(except for Swiss citizens). While I also support regulated immigration, we as Americans, do not want to perform the "menial" jobs that migrants are willing to do. My ancestors survived WW1, WW2, the dust bowl, the Great Depression and every subsequent calamity but never lost track of the integrity in ANY job that feeds a family. There is a lot of whining about losing manufacturing jobs to China but I dare anyone who feels that they have missed out on a job opportunity to go and pick oranges in the blazing Florida sun with a 50 pound bag on the back or work a low paid job in a sneaker manufacturing facility. Let's not forget what drives the USA economy: the consumer. We have benefitted from cheap/inexpensive Chinese labor and goods for a long time and will feel the pain if this tariff war is not resolved in a realistic manner. China's currency manipulation has always been geared towards boosting their exports and I do not foresee that policy changing anytime soon. China is denying that any trade talks are happening and there is increasing day light visible between DJT and his Cabinet members. Bessant won't confirms trade negotiations and Rubio claims not to know what DJT's stance is towards Russia/Ukraine. It all comes down to DJT's obsession with the white whale, China. Who will blink first? I do not know but this zero sum game is dangerous and could potentially plunge the entire global order into a crisis the likes of which will dwarf WW2 and 2008/2009. I have initiated a short EUR/USD position at 1.1420 with an eye toward 1.0958 or lower. I am not claiming that the divestment in USA assets has run its course but at this point, I am inclined to reaffirm my belief in American exceptionalism but not in leadership. The Euro Zone still stands to lose more than the USA, especially in the light of tepid German economic performance and the unresolved Ukraine/Russia war. There has been a lot of smoke and mirrors during the first 100 days with a flurry of executive orders to fight the woke culture, annex sovereign territories etc. but as human beings, we all have a need and right to shelter, food, clean water and air and the ultimate, the pursuit of happiness. And happiness goes right out the window when the aforementioned rights are not met or satisfied. So, here lies the Moby Dick moment. Will DJT's obsession with tariffs and power drag us all down? Distinct possibility... Thank you for listening to my two cents and best of luck with your trades. How you draw the distinction between noise and trading signals, is up to your own analysis. I can only speak for my own bank account and capital but tread lightly through this minefield that should never have happened in the first place.
Short
by jvrfxalerts
5
Lingrid | EURUSD possible REVERSAL from Critical RESISTANCE FX:EURUSD is currently testing a significant upward trendline while consolidating in a narrow sideways range just above this crucial support. Notable bearish signals have emerged, including a clear divergence pattern and a false breakout attempt above the previous higher high level – a classic trap for bullish traders. Adding weight to the bearish case, price action has formed a long-tailed rejection bar on the daily timeframe precisely at the key resistance zone that corresponds with the 2022 high level. This powerful rejection at historical resistance shouldn't be overlooked. I anticipate a meaningful pullback once price decisively breaks below the upward trendline support. This corrective move appears increasingly probable given that price has now completed a textbook ABC pattern on the daily timeframe. The completion of this pattern, combined with the other technical signals, suggests we're likely at an inflection point where momentum could shift significantly to the downside. My goal is supprot zone around 1.11550 Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩‍💻
Short
by Lingrid
5
LOOKING FOR LONGS ON EUR/USDEUR/USD 15M - As you can see price has recently traded us down and into a Demand Zone, we have seen plenty of Demand being introduced into the market, which is the reason for the hawkish behaviour. I would now like to see price break structure officially, giving us the confluence to suggest a reversal is taking place, once we have that we can begin looking to take this market long. I have drawn a path out on how I would expect price to play out. Once we have that break its understandable that with every impulse is a correction, price will have to correct back down into something. Should we find an area of Demand for price to set a higher low from, that is where we can look to enter in from with those longer term buy positions, as soon as I have an update I will let you all know.
Long
by Lukegforex
Bearish drop?EUR/USD has reacted off the pivot and could drop to the 1st support. Pivot: 1.14245 1st Support: 1.1146 1st Resistance: 1.1569 Risk Warning: Trading Forex and CFDs carries a high level of risk to your capital and you should only trade with money you can afford to lose. Trading Forex and CFDs may not be suitable for all investors, so please ensure that you fully understand the risks involved and seek independent advice if necessary. Disclaimer: The above opinions given constitute general market commentary, and do not constitute the opinion or advice of IC Markets or any form of personal or investment advice. Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, are intended only to be informative, is not an advice nor a recommendation, nor research, or a record of our trading prices, or an offer of, or solicitation for a transaction in any financial instrument and thus should not be treated as such. The information provided does not involve any specific investment objectives, financial situation and needs of any specific person who may receive it. Please be aware, that past performance is not a reliable indicator of future performance and/or results. Past Performance or Forward-looking scenarios based upon the reasonable beliefs of the third-party provider are not a guarantee of future performance. Actual results may differ materially from those anticipated in forward-looking or past performance statements. IC Markets makes no representation or warranty and assumes no liability as to the accuracy or completeness of the information provided, nor any loss arising from any investment based on a recommendation, forecast or any information supplied by any third-party.
Short
by ICmarkets
1
German inflation higher than expected, Euro dipsThe euro is calm on Wednesday. In the North American session, EUR/USD is trading at 1.1334, down 0.45% on the day. Germany's inflation rate dropped to 2.1% y/y in April, down from 2.2% in March but above the market estimate of 2.0%. This was the lowest level in seven months, largely driven by lower energy prices. The more significant story was that core CPI, which excludes energy and food and is a more reliable indicator of inflation trends, rose to 2.9% from 2.6%. This will be of concern to policymakers at the European Central Bank, as will the increase in services inflation. The ECB has to balance the new environment of US tariffs and counter-tariffs against the US, which will raise inflation, along with the strong rise in the euro and fiscal stimulus which will boost upward inflationary pressures. The ECB will be keeping a close look at Friday's eurozone inflation report, which is expected to follow the German numbers. Headline CPI is projected to drop to 2.1% from 2.2%, while the core rate is expected to rise to 2.5% from 2.4%. The central bank would prefer to continue delivering gradual rate cuts in order to boost anemic growth, but this will be contingent on inflation remaining contained. The markets were braced for soft US numbers but the data was worse than expected. ADP employment change declined to 62 thousand, down from a revised 147 thousand and below the market estimate of 115 thousand. This was followed by first-estimate GDP for Q1, which declined by 0.3% q/q, down sharply from 2.4% in Q4 and lower than the market estimate of 0.3%. This marked the first quarterly decline in the economy since Q1 2022. The weak GDP reading was driven by a surge in imports ahead of US tariffs taking effect and a drop in consumer spending. EUR/USD has pushed below support at 1.1362 and is testing support at 1.1338. Below, there is support at 1.1306 There is resistance at 1.1394 and 1.1418
by OANDA
German inflation higher than expected, Euro dipsThe euro is calm on Wednesday. In the North American session, EUR/USD is trading at 1.1334, down 0.45% on the day. Germany's inflation rate dropped to 2.1% y/y in April, down from 2.2% in March but above the market estimate of 2.0%. This was the lowest level in seven months, largely driven by lower energy prices. The more significant story was that core CPI, which excludes energy and food and is a more reliable indicator of inflation trends, rose to 2.9% from 2.6%. This will be of concern to policymakers at the European Central Bank, as will the increase in services inflation. The ECB has to balance the new environment of US tariffs and counter-tariffs against the US, which will raise inflation, along with the strong rise in the euro and fiscal stimulus which will boost upward inflationary pressures. The ECB will be keeping a close look at Friday's eurozone inflation report, which is expected to follow the German numbers. Headline CPI is projected to drop to 2.1% from 2.2%, while the core rate is expected to rise to 2.5% from 2.4%. The central bank would prefer to continue delivering gradual rate cuts in order to boost anemic growth, but this will be contingent on inflation remaining contained. The markets were braced for soft US numbers but the data was worse than expected. ADP employment change declined to 62 thousand, down from a revised 147 thousand and below the market estimate of 115 thousand. This was followed by first-estimate GDP for Q1, which declined by 0.3% q/q, down sharply from 2.4% in Q4 and lower than the market estimate of 0.3%. This marked the first quarterly decline in the economy since Q1 2022. The weak GDP reading was driven by a surge in imports ahead of US tariffs taking effect and a drop in consumer spending.
by OANDA
Dollar looking at worst month since November 2022 | FX ResearchThe US dollar is demonstrating some resilience despite recent setbacks, perhaps with the market focusing on the upcoming Q1 GDP data which analysts have downgraded to expect a contraction against a consensus forecast of 0.2%. Meanwhile, the dollar looks set to put in its weakest monthly performance since November of 2022 despite what had been some reports of dollar demand on month-end rebalancings earlier today. In Australia, the Q1 CPI report showed inflation slightly above expectations but the core trim mean dropped, aligning with the RBA's target range for the first time since Q4 of 2021, supporting expectations of 25 basis point rate cut on May the 20th. Eurozone Q1 GDP outperformed at 0.4% Q over Q, doubling forecasts, while President Trump was back at it criticizing Fed Chair Powell, also touting his own economic policies. Looking ahead, we get Canada GDP, the already mentioned US GDP, and other US reads including ADP employment, Chicago PMIs, personal income and spending, and pending home sales. Exclusive FX research from LMAX Group Market Strategist, Joel Kruger
by BlackBull_Markets
What Is SMT Divergence, and How Can You Use It in Trading?What Is SMT Divergence, and How Can You Use It in Trading? SMT divergence, or Smart Money Technique divergence, is a concept used by traders to analyse imbalances in correlated markets. By identifying when price movements deviate between related instruments, traders can uncover potential shifts in market momentum, often linked to institutional activity. This article explores what SMT divergence is, how SMT divergence trading works, and its practical applications. What Is SMT Divergence? SMT divergence, short for Smart Money Technique divergence, refers to a specific type of price discrepancy between two correlated financial instruments. Part of the Inner Circle Trader (ICT) methodology, this divergence is often interpreted as a sign of institutional or "smart money" activity, as it highlights potential inefficiencies or imbalances in the market. Here’s how an ICT SMT divergence works: correlated instruments—like EUR/USD and GBP/USD in forex, or major stock indices like the S&P 500 and NASDAQ—typically move in the same direction under normal market conditions. SMT divergence occurs when one instrument makes a higher high or lower low, while the other fails to follow suit. This inconsistency suggests that buying or selling pressure may be uneven across these markets, often caused by larger market participants adjusting their positions. For example, if EUR/USD forms a new high, while GBP/USD lags behind and fails to break its previous high. This divergence could indicate waning momentum in one pair, hinting at a potential reversal or shift in the overall market structure. Traders analysing SMT divergence often see these moments as key opportunities to assess whether institutional players might be involved. To identify an SMT divergence, you can monitor two correlated assets’ charts and observe discrepancies. Also, there are SMT divergence indicators for MT4, MT5, and TradingView available online that can automate the process. The Core Components of SMT Divergence SMT divergence relies on three key components: correlated instruments, divergence between price movements, and the involvement of institutional players. Understanding these elements is crucial for applying this concept. 1. Correlated Instruments At the heart of SMT divergence is the relationship between correlated markets. These are instruments that typically move in tandem due to shared economic drivers. For instance, in forex, pairs like EUR/USD and GBP/USD often exhibit similar trends because they’re influenced by the strength of the US dollar, as well as their close regional ties and trade relationships. In equities, indices like the Nasdaq 100 and S&P 500 often align because they reflect broader market sentiment and contain overlapping stocks. 2. Divergence in Price Movements The divergence occurs when these typically correlated instruments fail to move in sync. For example, one instrument may reach a higher high, while the other stalls or even reverses. This mismatch is more than just noise—it can signal a deeper imbalance in the market, often linked to uneven supply and demand dynamics. It’s these price discrepancies that traders scrutinise to identify potential turning points. 3. Institutional Activity One of the reasons SMT divergence is so closely watched is its potential link to smart money behaviour. Institutions often use correlated instruments to mask their actions, creating subtle imbalances that only become apparent through careful analysis. For instance, when one correlated pair lags, it might reflect deliberate accumulation or distribution by larger players. How Traders Analyse SMT Divergence Analysing SMT divergence helps in understanding the nuanced relationship between correlated instruments and interpreting these imbalances correctly. Unlike leading correlations—such as oil influencing the Canadian dollar—SMT divergence doesn’t rely on one asset consistently driving the other. Instead, it focuses on shifts in momentum where neither instrument is the leader, but their combined behaviour hints at potential market moves. Identifying Divergence Traders start by observing price action in two correlated instruments or timeframes. SMT divergence becomes apparent when one instrument forms a higher high or lower low, while the other fails to do so. For example, if EUR/USD makes a higher high, but GBP/USD stalls below its previous peak, this inconsistency could signal fading bullish momentum in the broader market. The key is that neither asset leads; instead, the divergence itself provides the signal. Some common correlations traders use include: - Forex Pairs: EUR/USD and GBP/USD USD/JPY and USD/CHF DXY and USD/CAD - Cryptocurrencies*: BTC/USD and ETH/USD - Equity Indices: S&P 500 and NASDAQ FTSE 100 and DAX - Treasuries: US 10-Year Treasury Yield and USD/JPY - Commodities: Brent Crude and WTI Crude Oil Interpreting Divergence at Extremes SMT divergence is particularly significant when it occurs at market highs or lows. When divergence appears at highs—such as one instrument making a higher high while the other fails—it often signals a potential bearish reversal in the stronger instrument. Conversely, at lows, if one makes a lower low while the other holds firm, it may indicate a potential bullish reversal in the weaker one. This imbalance highlights where momentum might shift. Adding Context Traders rarely rely on an SMT divergence strategy alone. They often look for supporting evidence, such as volume analysis, market structure shifts, or order flow data, to confirm the signal. For instance, divergence combined with signs of institutional selling near a high could strengthen the case for a bearish move. SMT Divergence in Different Market Conditions SMT divergence behaves differently depending on market conditions, offering traders insights that vary between trending and ranging environments. Its effectiveness hinges on the context in which it appears, so understanding how it adapts to different scenarios is key. Trending Markets In trending markets, SMT divergence often signals potential reversals or pauses in momentum. For example, in a strong uptrend, divergence at a new high (where one correlated instrument makes a higher high while the other does not) can indicate waning buying pressure. This inconsistency might suggest that institutional players are beginning to reduce their positions or shift market direction. A similar principle applies in downtrends: divergence at a fresh low, where one instrument breaks lower while the other doesn’t, could signal that bearish momentum is losing steam. Traders often use these moments to reassess their analysis and consider the possibility of a reversal or pullback within the trend. Ranging Markets In a range-bound environment, SMT divergence takes on a different role. Rather than hinting at trend reversals, it often highlights potential breakouts or false moves. For instance, during a consolidation phase, if one correlated instrument makes a sharp move outside the range while the other stays contained, it may signal that the breakout is unsustainable and a reversal back into the range is likely. Alternatively, if both instruments diverge significantly at the edges of the range, it could suggest that smart money is accumulating or distributing positions in preparation for a breakout. Different Asset Classes SMT divergence isn’t limited to one market type. In forex, it often reveals imbalances caused by macroeconomic drivers like central bank policies. In equities, it can signal sector rotation or institutional adjustments. Commodities, particularly oil or gold, may show divergence influenced by supply and demand dynamics. Limitations and Common Misconceptions While SMT divergence is a powerful tool for analysing market imbalances, it’s important to understand its limitations and avoid common misconceptions. Misinterpreting divergence can lead to flawed decisions, especially if it’s viewed in isolation or without proper context. Limitations - False Signals: Not all divergences indicate institutional activity or meaningful shifts in the market. Low liquidity or erratic price movements can create divergence that doesn’t hold significance. - Context Dependency: SMT divergence requires a solid understanding of market conditions. Its reliability decreases in highly volatile or choppy environments where correlations break down temporarily. - Not a Standalone Tool: Relying solely on SMT divergence can be risky. Traders use it alongside other forms of analysis, such as market structure or volume data. Common Misconceptions - Always Linked to Institutional Activity: Not every instance of SMT divergence involves smart money. Divergences can also result from retail trading activity or macroeconomic events. - Predicting Market Direction: SMT divergence doesn’t guarantee outcomes; it highlights imbalances. Further analysis is needed to evaluate whether the market will reverse, continue, or consolidate. - Universal Applicability: While it works across various markets, not all instruments are equally suitable for SMT divergence due to differences in liquidity or drivers. Practical Applications of SMT Divergence SMT divergence is a versatile analytical method that traders use to refine their strategies and deepen their understanding of market dynamics. Here’s how it’s typically applied in practice: Identifying Market Turning Points One of the most common uses of SMT divergence is spotting potential reversals. When divergence appears at key highs or lows, it often signals that momentum is shifting. When combined with other common trading tools, such as support and resistance, as well as ICT methodology concepts like order blocks and fair value gaps, this can be used to time entries or adjust risk exposure. Potentially Enhancing Risk Management SMT divergence can potentially enhance risk management by offering early warnings about changes in market conditions. If divergence aligns with other factors—such as weakening volume or significant resistance/support levels—it can serve as a signal to tighten stops or reduce position sizes, depending on the trader’s broader approach. At the same time, it can also provide clear boundaries for setting stop losses. If a trader has confidence that a reversal in one asset is likely due to an SMT divergence, then a stop loss can be placed immediately after the maximum or minimum of the divergence. The Bottom Line The SMT divergence is a valuable tool for understanding market imbalances and spotting potential turning points. By combining it with other analysis methods, traders can gain deeper insights into price action. FAQ What Does Divergence Mean in Trading? Divergence in trading refers to a mismatch between the price action of an asset and a technical indicator or between two correlated instruments. It often signals a potential change in trend, as the imbalance suggests a shift in market momentum. What Is SMT in Trading? SMT in trading stands for Smart Money Technique. SMT divergence is one of the ICT trading concepts. It focuses on identifying market imbalances that may reflect the activity of institutional traders, seen through divergence between correlated instruments. What Does SMT Divergence Mean? The SMT divergence meaning refers to an occasion when two correlated instruments fail to move in sync. One can make a higher high while the other does not or one can make a lower low while the other doesn’t. This indicates potential smart money involvement and signals a possible trend shift. What Is an Example of SMT Divergence? A common example is in forex, where EUR/USD forms a higher high, but GBP/USD does not. This divergence could suggest fading bullish momentum, signalling a possible reversal in EUR/USD. What Is the Strongest Divergence Indicator? While SMT divergence itself is powerful, traders often combine it with indicators like RSI or volume profiles for added confirmation. The strongest signals come from divergence paired with a broader market context. *Important: At FXOpen UK, Cryptocurrency trading via CFDs is only available to our Professional clients. They are not available for trading by Retail clients. To find out more information about how this may affect you, please get in touch with our team. This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Education
by FXOpen
1
EUR/USD: Possible Fall Ahead? Let's See! (READ THE CAPTION)Upon reviewing the EUR/USD chart on the 3-day timeframe, we can see that following a sharp decline in the Dollar Index (DXY), the pair experienced a bullish move, reaching the 1.15 supply zone. If the price manages to stabilize and close below the 1.15–1.17 area, we can anticipate a further drop in EUR/USD to fill the created Liquidity Void (LV). This analysis will be updated accordingly. Please support me with your likes and comments to motivate me to share more analysis with you and share your opinion about the possible trend of this chart with me ! Best Regards , Arman Shaban
Short
by ArmanShabanTrading
1
EURUSD Elliott Wave: EUR Trend is MatureThe rally for EURUSD has been spectacular. The uptrend is nearing its point of exhaustion, if it already hasn't seen the top. We've anticipated a large uptrend since the trend change in January. There are 2 colored labels on the chart, red and black labels. RED AND BLACK WAVE COUNTS The RED labels imply a high in wave 1 and EURUSD is declining in wave 2. Wave 2 likely stretches down to 1.07-1.12 and may take 1 to 3 months to develop. The market geometry within this rally fit really well on the red. However, the lack of RSI divergence at the end of wave 1 is a little worrisome. Typically, we'll see wave ((v)) diverge on RSI relative to the high of wave ((iii)). The black is a slight variation of the red. BLACK suggests the recent high wave wave ((iii)). A little more dip and correction is wave ((iv)). Then, one more rally in ((v)) to finalize the larger degree wave 1. Either way, the trends in EURUSD are skewing to the downside. Since wave 2 is a corrective wave, it'll be a difficult one to trade. If you want to trade USD strength, consider buying USDCAD or shorting AUDUSD. From lower levels (1.07-1.12) in about 1-3 months, a bullish setup in EURUSD and GBPUSD are likely to emerge for another powerful run.
Short
by JWagnerFXTrader