SMC Setup 3 runs on MT4 and MT5 and marks the order block behind a shallow pullback: one where price threatened the previous low, held above it, and then broke the old high by a distance worth calling a break.
It's the sibling of Setup 2 and the difference between them is a single swing point. That point changes what the block means, which is why they're separate tools.
The sequence
Swing points are labelled HH, HL, LH and LL from a five-bar pivot. For a bullish setup the last seven read, oldest to newest:
HH→HL→LH→HL→LH→LL→HH
Look at the fourth label: HL. That's the whole point. The pullback made a higher low — it came down toward the prior low and did not take it out. The demand sitting there was never traded through.
Setup 2 has an LL in that slot instead. There, the low was cleared before the reversal. Here it wasn't. Two different market states, two different meanings for the block that gets drawn, and no chart can produce both at once.
The half-ATR rule
The reclaim has to beat the oldest high in the sequence by at least half of the current ATR, on top of simply beating it.
That's what stops the tool calling a one-pip poke through an old high a break of structure. Half an ATR scales with the instrument and the timeframe, so gold on H1 needs a real move and EURUSD on M15 needs a proportionate one, without you tuning anything.
A second rule requires the low that formed the block to sit above the low two pivots further back. The structure has to be building upward, not sliding.
The block and the wait
The candle at the sixth pivot becomes the zone, its own high to its own low, projected forward from the break bar.
The drawing is not the entry. A second stage watches for price to return: when a bar's low enters the zone while its open and close both stay above the zone's bottom, an alert fires, an arrow is drawn on that bar, and the box switches to a dotted outline so a used zone is never mistaken for a fresh one.
Tracking stops when a close pushes through the wrong side.
| Ordinary order block tool | This | |
|---|---|---|
| Structure | A break of structure | Seven labels in an exact order |
| Pullback depth | Not measured | Must have held the prior low |
| Break size | Any close past the level | At least half an ATR past it |
| Signals | On block creation | Creation, and the return to the zone |
| Used zones | Look identical | Dotted outline |
Which of Setup 2 and Setup 3 do you want
Both, if you work this way, because they don't overlap.
Setup 3 is the trend-continuation read: the trend paused, held its low, and resumed with force. Setup 2 is the reversal read: the low was cleared, the sellers got what they came for, and price turned anyway.
If you only want one, Setup 3 fires more often on trending instruments and Setup 2 fires more often around turns.
What it draws, and what it doesn't
One box per direction, a SMC03 Bullish(5) or SMC03 Bearish(5) label at the trigger bar, and an arrow at the touch. The raw pivot labels can be switched on with Show pivot when signal; they're off by default and worth turning on once while you learn what the tool matches.
No indicator buffers, so iCustom gets you nothing. No dashboard, no stop or target levels, no higher-timeframe read. Structure is measured on the chart timeframe only.
Where it's weak
One live zone per direction. The projected box is a single object per side, so a new setup replaces the previous one even if price never came back to it. Older boxes stay drawn but stop being watched.
The block is one candle, high to low. No refinement, no grouping, no body-only option. On a chart with long wicks the zone is wide, and there's no setting to narrow it.
The ATR is measured at the break. After a violent session the bar for a valid break is temporarily raised, so a quiet reclaim the next day can be rejected on size alone.
Five-bar pivots are short. On M5 and M15 the sequence is often matched against noise. Pivot Period is the first thing to raise, and it changes which structures exist rather than just filtering them.
Structure confirms late. A pivot needs bars to its right, so the setup lands a few candles after the swing that created it.
It's selective. Seven exact labels plus a size rule. Expect a handful of these a month per chart, not a handful a day.
Questions you'll have
Does SMC Setup 3 repaint? No. Everything is evaluated on closed bars behind a new-bar check. A drawn setup stays where it was drawn; the live zone extends its right edge, which is the zone still being watched.
What's the difference between Setup 2 and Setup 3? The fourth pivot back. Setup 3 needs a higher low there, meaning the pullback held the prior low. Setup 2 needs a lower low, meaning it didn't. Setup 3 is the continuation case.
What label will I see on my chart? SMC03 Bullish(5) or SMC03 Bearish(5), where the number in brackets is your Pivot Period.
Why is my chart empty? Usually the half-ATR rule: the sequence matched but the reclaim was too small. Turn on Show pivot when signal to see what structure the tool is reading.
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 newest setup per direction is tracked forward.
Can an EA read the zone? No. There are no indicator buffers; everything is a chart object. Use the terminal, email or Telegram alerts.
Best timeframe? H1 and H4 at the default pivot period. Raise Pivot Period before judging it lower down.
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.