SMC Setup 2 runs on MT4 and MT5 and marks one thing: the order block at a swing low that got taken out, once price has come back and beaten the old high by a distance that matters.
The distance test is the whole product. Everything else in here is structure bookkeeping that plenty of tools do.
The sequence
Swing points are labelled HH, HL, LH, LL from a five-bar pivot. For a bullish setup the last seven have to read, oldest to newest:
HH→HL→LH→LL→LH→LL→HH
An uptrend that rolled over, made a lower high, then a lower low, then failed again and made a second lower low. By any ordinary reading the trend is now down. Then price turns and prints a fresh higher high.
Those two consecutive lower lows are what the product's name is about. The pullback didn't just dip; it traded through the previous low, which means the demand that was sitting there was mitigated. Everyone long from that area is out. The order block at the second low is a block formed after the old one was cleared, and that's a different thing from a block that has never been tested.
The half-ATR rule
Here's the part I'd install it for.
The new high has to exceed the oldest high in the sequence by at least half of the current ATR, and separately by any amount at all. A close that beats the old high by a fraction of a point satisfies the second test and fails the first.
That single line throws out the most common false positive in this whole family of indicators: the break of structure that is really a spread, a wick and a stop run. On gold at H1 half an ATR is a real move. On EURUSD at M15 it's a few pips. Either way it scales with the instrument and the timeframe, and you don't have to tune anything.
A second price rule sits alongside it: the low that formed the block must be above the low two pivots further back. The structure has to be recovering, not collapsing.
What it does with the block
The candle at the second lower low becomes the zone: its own high and low, drawn as a box and projected forward from the break bar.
Then it waits. The setup being drawn is not the entry signal. When price comes back and the bar's low enters the zone while both the open and the close stay above the zone's bottom, a second alert fires, an arrow is drawn, and the box switches to a dotted outline so a used zone never looks like a fresh one.
The zone stops being tracked once a close goes through the wrong side of it.
| Ordinary break-of-structure tool | This | |
|---|---|---|
| What counts as a break | Any close past the level | A close past it by half an ATR or more |
| Structure | Usually two or three points | Seven labels in an exact order |
| Order block | Every one it finds | Only the one at the mitigated low |
| Signals | One, on the break | Two: setup formed, and price returned to the zone |
| Used zones | Look the same | Dotted outline |
Setup 2 against Setup 3
These two are close relatives and it's worth knowing which one you're looking at.
Setup 2 wants the pullback to make a lower low at the fourth point back. Setup 3 wants a higher low there. Everything else, including the half-ATR rule, is the same.
So Setup 2 is the deeper version: the prior demand was cleared out before the reversal. Setup 3 is the shallower one where it never was. They fire on different charts and there's no overlap between them, which is why they're sold as two products rather than one with a switch.
What it draws, and what it doesn't
One box per direction, a Bullish(5) or Bearish(5) label above the trigger bar, an arrow at the touch. The raw pivot labels are available through Show pivot when signal and are off by default.
No indicator buffers, so iCustom gets you nothing. No dashboard, no risk or reward levels, no higher-timeframe read.
Where it's weak
One live zone per direction. The projected box is a single object per side. A new bullish setup replaces the previous one even if price never returned to it, and you won't get a touch alert on the older one.
The block is one candle. No search for a better block, no refinement, no consolidation grouping. It's the candle at the pivot, high to low. On a chart with long wicks that box can be wide.
The ATR is read at the moment of the break. In a volatility spike the bar for a valid break is temporarily much higher, so quiet-market reclaims that follow a violent day can be rejected.
Five-bar pivots are short. On M5 and M15 the structure the tool matches is often noise. Pivot Period is the first setting to raise, and raising it changes which sequence exists rather than just filtering.
Structure confirms late. Pivots need bars to their right, so the setup appears a few candles after the swing that created it.
Questions you'll have
Does SMC Setup 2 repaint? No. Everything is evaluated on closed bars behind a new-bar check. A drawn setup stays put; the live zone extends its right edge, which is the zone still being watched.
Why is my chart empty? Most often the half-ATR rule. The sequence matched but the reclaim didn't clear the old high by enough. Turn on Show pivot when signal to see the structure the tool is reading.
What's the difference between Setup 2 and Setup 3? The fourth pivot back. Setup 2 needs a lower low there, Setup 3 needs a higher low. Setup 2 is the version where prior demand was cleared before the reversal.
Why did the box turn dotted? Price came back into it and the entry alert fired. Dotted means used.
Why no touch alert on an older setup? Only the most recent setup per direction is tracked forward.
Can an EA read the zone? No. There are no buffers; everything is a chart object. Use the alerts.
Best timeframe? H1 and H4 at the default pivot period. Raise Pivot Period before judging it on M15 or lower.
MT4? Both platforms are included, one download each. Same sequence, same ATR rule, same two-stage alerts.
Support
Message me through the site with a screenshot, the symbol and the timeframe, and I can tell you which condition a candidate failed. Updates are included for as long as your subscription runs.
Analysis tool. It places no trades and makes no profitability claim. Past price behaviour is not a guide to future price behaviour.