3. SMT, PSP & Strength Switch
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3.1 SMT Rules
Section titled “3.1 SMT Rules”Reversal SMT
Section titled “Reversal SMT”- Reversals usually require 2-stage SMT.
- 15m gaps are only suitable for early reversal, preferably in discount.
- Do not use 15m gaps in premium as a reversal basis.
- To confirm the daily high / low, usually require:
- a swing point;
- SMT;
- sometimes 2-stage confirmation.
Continuation SMT
Section titled “Continuation SMT”- For recent gaps, 1-stage SMT can be used for continuation.
- For old gaps, 2-stage SMT is usually required.
- For 2-stage SMT, the first stage should ideally occur at the key level.
- In a gap, usually only 1 stage is needed.
SMT Break
Section titled “SMT Break”If there is no SS / HTF open / new key level to time expansion, but the market has a lagging-asset sequence, understand the condition as:
- a negative condition;
- SMT-break direction becomes more important;
- prioritise the lagging asset’s catch-up / SMT-break sequence;
- do not force the original reversal idea.
SMT Quality Filters
Section titled “SMT Quality Filters”Low-probability SMT:
- SMT high / low is not printed at roughly the same time.
- SMT fill creates EQL / EQH, unless there is a V-shape recovery.
- Double sweep is valid, but low probability.
- Close-proximity SMT in premium with a swing is usually more like a retracement.
- SMT away from a key level is lower quality.
- Valid SMT should ideally be at a key level.
- Exception: a failure swing with SMT can still be tradable if other conditions support it.
- If daily / weekly highs and lows are wickless on both assets and only one later trades into that opening price to create a wick, the SMT is low quality — the other asset still has a reason to return to its level.
- Only SMTs aligned with the direction of your draw liquidity are worth tracking. An SMT that forms on the opposing side of the range is irrelevant to the trade — it is only ever going to produce a retracement, not a reversal of your draw, so it does not need to be filtered out or feared.
3.2 Precision Swing Point, PSP
Section titled “3.2 Precision Swing Point, PSP”PSP = swing point + SMT.
The market cannot make a high-quality reversal without both a swing point and SMT.
Probability ranking:
- Swing point
- PSP
- 2-stage PSP
- SMT + PSP
- PSP + SMT
Key rules:
- PSP should ideally occur at the swing point.
- 2-stage PSP = 2-stage SMT.
- SMT + PSP is the highest-probability reversal structure.
- When SMT breaks, it may create a true reversal.
- A driver candle forming PSP is a time-based CiC and has higher probability.
- After decoupling, the 6:00am H4 close may often form a PSP, which becomes important for the 10:00am H4 re-sync.
3.3 Strength Switch, SS
Section titled “3.3 Strength Switch, SS”Definition
Section titled “Definition”SS = the lagging asset becomes strong, or the relative strength relationship between leading and lagging assets changes.
Common forms:
- SSMT
- PSP
- Gap-size difference
- Displacement-speed difference
- Candle-body difference
- Bullish / bearish candle bias difference
- Double sweep, low probability
SSMT Defined
Section titled “SSMT Defined”SSMT (sequential SMT) is a time-based crack in correlation: it only asks whether the high/low that just printed SMT is the previous candle’s high/low on some specific timeframe — the previous 90-minute high/low, the previous 6H high/low, the previous daily high/low, or the previous weekly high/low. Nothing more than that; it is not evaluated against any candle further back than the immediately previous one on the timeframe being used.
Priority of SS
Section titled “Priority of SS”- SS overrules all other confluence.
- If assets decouple, wait for SS before entering.
- SS is the asset re-sync trigger.
- SS confirms daily ERL ↔ IRL, meaning DH / DL.
- If SS appears at a reversal, usually all assets will reach the draw.
- If there is no SS, all assets need a V-shape before a reversal can be considered.
- When timing expansion, SS has priority over HTF open and new key level.
3.4 Two-Stage SMT Forms
Section titled “3.4 Two-Stage SMT Forms”Two-stage SMT can take more than one shape:
- Same-timeframe form: the asset that swept switches strength at a close-proximity high / low soon after, sometimes shaped like a roof.
- Higher-timeframe / lower-timeframe form: a large-range, higher-timeframe SMT, for example a daily swing high, is confirmed by a smaller-range, lower-timeframe SMT.
- Either form should still be confirmed by a strength switch before it is trusted. Do not assume the first-stage SMT is holding until the strength switch appears.
3.5 PSP Variants
Section titled “3.5 PSP Variants”- Mechanically, a PSP is a candle 2 that closes back within candle 1’s range on both correlated assets, but in opposing directions — one closes bullish, the other bearish. That opposing close is the crack in correlation.
- Continuation PSP: forms during the retracement that follows a true reversal, not at the reversal itself. One asset creates a swing point in that retracement while the other doesn’t, forming an SMT — this is the trigger for the retracement to end and the original expansion to resume, not a new reversal signal.
- Strength Switch PSP: the asset that sweeps a high or low is normally the stronger asset in the triad, but instead closes against its expected bias. That mismatch is itself a Strength Switch, layered onto the PSP, and is one of the highest-probability sequences to trade.
3.6 Confirmation Ordering for a True Reversal
Section titled “3.6 Confirmation Ordering for a True Reversal”A true reversal always needs two cracks in correlation, but which one forms first changes whether candle 2 itself is tradeable or whether you have to wait for candle 3:
- PSP confirms SMT: a precision swing point closes first at the key level, and a consecutive-candle SMT then confirms it while candle 2 is still open. Because the two-stage crack is already complete, candle 2 itself can be traded as the reversal.
- SMT confirms PSP: an SMT forms first, but the swing is only confirmed once that candle closes as a PSP. Since the two-stage crack isn’t complete until the close, you cannot trust candle 2 in real time — wait for candle 3 and trade it as the continuation instead.
- Two-stage PSP with two-stage SMT: a two-stage PSP forms, and the high or low it creates is itself then run and reconfirmed by a second, separate two-stage SMT. This three-stage combination is rarer but a very high-probability signature when it appears.
- If there is no two-stage crack in correlation at all — for example only a single PSP or a single SMT with no confirmation — it is not a true reversal, and the fractal should not be traded.
- As a rule of thumb, the number of cracks in correlation required drops by one at every step away from the reversal: a true reversal itself needs two; the higher-timeframe continuation gap it creates needs one (an SMT fill or single PSP/SMT closure is enough); the lower-timeframe reversal signature traded inside that gap needs none beyond the V-shaped reversal signature itself, since the higher-timeframe crack has already done the filtering.
Confirming a Reversal Across Timeframes
Section titled “Confirming a Reversal Across Timeframes”A candle’s own timeframe does not always show the two-stage crack directly. There are three cases:
- Same-timeframe confirmation: the candle itself prints the two-stage crack in correlation at its own high / low — trade it directly, no further profiling needed.
- Lower-timeframe profiling: the candle shows no two-stage crack on its own timeframe, but a lower timeframe (for example a 4H swing profiling a daily candle’s wick) shows the two-stage crack instead. Use that lower-timeframe confirmation to trust the higher-timeframe wick.
- No confirmation on any relevant timeframe: neither the candle’s own timeframe nor an appropriate lower timeframe shows a two-stage crack. There is no true reversal here — wait for the candle to close, then trade continuation from the new invalidation it creates instead.
Personal study notes, shared as-is and in good faith. Educational material only — nothing on this site constitutes financial advice.