Correlated pairs move in tandem but right before distribution hits, there’s a crack in correlation, which is called SMT or just a simple divergence.
For example: If GBPUSD creates a higher high, but EURUSD creates a lower high (at the same time). Then we can predict a bearish distribution in price. or; If EURUSD creates a higher high, but GBPUSD creates a lower high (at the same time). Then we can predict a bearish distribution in price.
In the other hand we have:
If GBPUSD creates a lower low, but EURUSD creates a higher low (at the same time).
Then we can predict a bullish distribution in price or; If EURUSD creates a lower low, but GBPUSD creates a higher low (at the same time). Then we can predict a bullish distribution in price.
This phenomenon occurs when there’s a shift in the market direction, so it is basically for “reversals”.
Example 1:https://drive.google.com/file/d/1Efm1C8McqwOuJL1cJ7ewmLgeEh0hSht1/view?usp=sharing
Example 2:https://drive.google.com/file/d/19pZ-j-IqlnVK6DWSHqkhgu7ij0291GEv/view?usp=sharing
Example 3:https://drive.google.com/file/d/1JybOtn7mt3lcrHSPexUNssgkPdlK-bxS/view?usp=sharing.
If we could get an EA that receives a buy or sell signal based on this idea would be amazing.