SMC setup 05 Minor OB and Trend Proof

🔵Introduction

The "Smart Money Concept" transcends the realm of mere technical trading strategies to embody a comprehensive philosophy on the dynamics of market operations. It posits that key market participants engage in price manipulation, thereby complicating the trading landscape for smaller, retail traders.

Under this doctrine, retail traders are advised to tailor their strategies in alignment with the maneuvers of "Smart Money" - essentially, the capital operated by market makers.

To this end, one should endeavor to mirror the trading patterns of these influential market participants, who are adept at navigating through the nuances of supply, demand, and overall market structure. As a proponent of Smart Money trading, these elements are pivotal in your decision-making process for trade entries.

🟣Key Insights

The core principle of this strategy hinges on misleading other traders. A sudden market movement against the prevailing trend that results in the formation of either a lower low or a higher high, followed by a pullback where a divergence pattern emerges, sets the stage.

Subsequently, the market may form another lower low or higher high. Traders, persuaded that the market will continue along the trajectory of the new movement, are caught off-guard when the price abruptly reverses direction. Following a "Stop Hunt" of the traders' open positions, the market resumes its initial trend.

To grasp the essence of this setup, observe the following illustrations.

"Bullish Setup" - figure 2

"Bearish Setup" - figure 3

🔵How to Use

The setups can be customized based on the desired formation period. This adjustment can be made through the indicator's price setting options, where the default period is set at 2.
Upon configuring your preferred period, the signals become actionable. Once a setup forms, the subsequent step involves waiting for the price to reach the "Order Block".

"Bullish Setup" - figure 4

When bullish structure detected, indicator auto find OB  at Lowest point (LL) and "rayright" OB. Buy signal happen when price re-test this OB. Indicator will send notificate to user when structure detected and buy signal happen.

Model will be invalid when close price lower than bottom of OB.

"Bearish Setup" figure 5

When bearish structure detected, indicator auto find OB  at Lowest point (LL) and "rayright" OB. Sell signal happen when price re-test this OB. Indicator will send notificate to user when structure detected and buy signal happen.

Model will be invalid when close  price higher than top of OB.

🔵Settings

- Pivot Period: the most important setting that define pivot point length (left side and right side). Diffirent period will diffirent model detected.

- Lookback number: the history bar calculate at init time

- Show or high pivot point when have model

- Alert setting (when bullish setup detected and when price test OB - entry)

- Prefix: the prefix of object shown in chart.  

The common weakness of indicators that automatically identify patterns according to the SMC strategy is that they need a fixed length to determine the pivot point. With different length values, "HH", "LL", "LH", "HL" will be diffirent, the structurally recognized model will be different.

To overcome the above weakness, I introduced the concept of prefix. With different prefixes, users can attach multiple indicators on the same chart, each indicator applies to a different pivot length such as 2, 5, 6, 7.... From there, it is possible to monitor models across all market structures.