How the SMI is calculated
For each period, the indicator takes the distance between the close and the midpoint of the highest high and lowest low over the lookback window, then divides it by half that range. The result is double-smoothed with exponential averages and plotted with a signal line. A reading of zero means price closed exactly at the midpoint of its recent range — neither side has the edge.
The four signals worth trading
- Signal-line crossover. SMI crossing above its signal line suggests momentum turning up; below suggests the reverse.
- Zero-line cross. Crossing above zero means the close is now in the upper half of the recent range — a trend filter more than an entry.
- Extreme reversal. A turn back from beyond +40 or -40 marks a stretched move losing steam.
- Divergence. Price and SMI disagreeing on highs or lows is the indicator's strongest signal.
Settings by trading style
- Swing trading on daily charts: 14/3/3 with a 10-period signal line for fewer, higher-quality turns.
- Intraday on 15m to 1H: 10/3/3, the standard configuration, balancing speed and noise.
- Scalping: shorter lookbacks react faster but need a trend filter, or the crossovers become unusable.
- Whatever you choose, keep the settings fixed across a sample of trades before judging the indicator.
Using SMI with structure, not instead of it
Momentum oscillators describe how a move is behaving, not where it should stop. Pair the SMI with the levels you already marked: an oversold SMI turning up at a support level is a setup, while the same reading mid-range is not. In a strong trend, use the SMI for pullback timing rather than for counter-trend reversals.
How Vision AI reads SMI on a screenshot
Upload a chart with the SMI applied and the AI reads the oscillator visually: where the line sits relative to the signal line and zero, whether the reading is at an extreme, and whether it diverges from price. You get the momentum read plus the invalidation level, without exporting data or configuring anything.
SMI readings and what to do
| Reading | What it shows | How to use it |
|---|---|---|
| Above +40 | Stretched to the upside | Manage longs, avoid chasing |
| 0 to +40 | Bullish momentum, room left | Favour pullback longs |
| -40 to 0 | Bearish momentum, room left | Favour bounce shorts |
| Below -40 | Stretched to the downside | Watch for reversal confirmation |
| Divergence | Momentum leaving the move | Tighten stops, wait for a cross |
Read your SMI chart with AI
Upload a chart with the indicator applied and get the momentum read, divergence check and invalidation level.
Analyze a chart freeFrequently asked questions
What is the Stochastic Momentum Index (SMI)?
The SMI measures where the close sits relative to the midpoint of the recent high-low range, rather than relative to the range's low as the classic stochastic does. It oscillates roughly between -100 and +100 and produces smoother, less noisy signals.
How is SMI different from the standard stochastic?
The classic stochastic compares the close to the lowest low of the lookback period. The SMI compares it to the range midpoint, which centres the oscillator at zero and reduces the whipsaws that plague the standard version in choppy markets.
What are good SMI settings?
A common configuration is 10 periods for the range, 3 for the first smoothing, 3 for the second, and a 10-period signal line. Longer settings suit swing trading; shorter ones react faster but generate more false signals.
What SMI levels count as overbought and oversold?
Readings above +40 are generally treated as overbought and below -40 as oversold. In strong trends the oscillator can hold at an extreme for a long time, so use those levels as context rather than as automatic entries.
How do you trade SMI divergence?
When price makes a higher high while the SMI makes a lower high, bullish momentum is fading. The inverse — lower price low with a higher SMI low — warns of a bottoming market. Confirm with a signal-line cross before acting.