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Combining Smart Money Concepts with Classic Indicators — EMA, RSI, and Volume Filters

Combining Smart Money Concepts with Classic Indicators — EMA, RSI, and Volume Filters

By HorizonAI Team

Smart Money Concepts (SMC) and classic indicators are often treated like rival religions.
You either draw ICT‑style structure and liquidity or you trade moving averages and RSI—but you don’t have to choose.

In this guide, you’ll learn how to combine SMC with indicators so you get:

  • The narrative and precision of SMC (structure, liquidity, OB, FVG)
  • The objectivity and testability of indicators (EMA, RSI, volume)

We’ll cover:

  • How to use EMAs as trend and pullback filters around SMC setups
  • How RSI can confirm or filter liquidity grabs and OB/FVG entries
  • How volume can validate displacement and breakouts
  • How to start turning these hybrids into Pine Script v6 strategies
  • How HorizonAI can generate and iterate on these ideas for you

Why Combine SMC and Indicators?

SMC gives you:

  • A detailed language for:
    • Market structure (HH/HL, LH/LL, BOS, CHOCH)
    • Liquidity (highs/lows, equal levels, sessions)
    • Order blocks and FVGs

Indicators give you:

  • Clear, numeric rules
  • Easier automation and backtesting
  • Less reliance on discretionary drawing

The goal isn’t to “fix” SMC or “replace” indicators—it’s to:

  • Use SMC for where and why
  • Use indicators for when and how much

EMA + SMC: Trend Filter and Pullback Context

Exponential Moving Averages (EMAs) are great for:

  • Defining trend direction
  • Measuring how extended price is
  • Providing objective pullback levels

Example: EMA Trend Filter for SMC

Concept:

  • Use SMC for structure and liquidity
  • Use EMAs for:
    • Higher‑timeframe bias
    • Intraday trend alignment

Simple rules (EURUSD example):

  • 4H structure is bullish (SMC)
  • On 15m:
    • 50 EMA > 200 EMA (trend filter)
    • Long only when price is above 200 EMA
    • Look for SMC entries (liquidity sweep + OB/FVG in discount)

EMA Filter in Pine (Skeleton)

//@version=5
indicator("SMC + EMA Trend Filter", overlay = true)

ema50  = ta.ema(close, 50)
ema200 = ta.ema(close, 200)

plot(ema50,  "50 EMA", color = color.blue)
plot(ema200, "200 EMA", color = color.red)

// Trend filter
bullTrend = ema50 > ema200
bearTrend = ema50 < ema200

bgcolor(bullTrend ? color.new(color.green, 95) : bearTrend ? color.new(color.red, 95) : na)

You can then tell HorizonAI:

"Only allow SMC long entries when ema50 > ema200 and price is above ema200; only allow shorts in the opposite case."

RSI + SMC: Overextension and Confirmation

RSI isn’t just for retail “overbought/oversold” memes.
In an SMC context, RSI can:

  • Confirm overextension into liquidity
  • Help avoid fading strong momentum

Example: Liquidity Grab + RSI Exhaustion

Scenario (bearish idea):

  • Market sweeps above prior high in New York (liquidity grab)
  • Forms a wick and closes back inside the range
  • RSI on 15m is above 70 at the sweep

Use case:

  • Liquidity grab suggests stops were run
  • RSI > 70 suggests short‑term exhaustion
  • You then look for:
    • Bearish CHOCH on lower timeframe
    • Entry from nearby OB or FVG

Simple RSI Overlay in Pine

//@version=5
indicator("RSI Overlay for SMC", overlay = false)

length     = input.int(14, "RSI Length")
oversold   = input.int(30, "Oversold")
overbought = input.int(70, "Overbought")

rsiValue = ta.rsi(close, length)

plot(rsiValue, "RSI", color = color.purple)
hline(oversold,  "Oversold",  color = color.green)
hline(overbought, "Overbought", color = color.red)

You don’t need to show RSI on the same pane as SMC drawings—just use it as an extra requirement in your strategy logic.

Volume + SMC: Validating Displacement and Breakouts

SMC leans heavily on displacement and aggressive pushes.
Volume can help confirm whether:

  • A move through liquidity is meaningful
  • A BOS or CHOCH is backed by real participation

Example: FVG + Volume Spike

Concept:

  • Only treat a displacement candle as creating a “valid” FVG if:
    • Its body is large relative to recent candles
    • Volume is above average

This reduces the number of random FVGs and focuses you on moves with institutional involvement.

Volume Filter in Pine (Concept)

//@version=5
indicator("Volume Spike Filter", overlay = false)

volMA      = ta.sma(volume, 20)
volSpike   = volume > volMA * 1.5

plot(volume, "Volume", style = plot.style_columns)
plot(volMA,  "Volume MA", color = color.orange)
bgcolor(volSpike ? color.new(color.green, 90) : na, title = "Volume Spike")

You can then use volSpike as a condition inside your SMC FVG/OB detection logic.

Building a Hybrid SMC + Indicator Model

Let’s sketch a simple hybrid model without going into full code.

Example: Bullish Hybrid (EURUSD 15m)

  1. 4H SMC bias: bullish (HH/HL, BOS up)
  2. Trend filter: 50 EMA > 200 EMA on 15m, price above 200 EMA
  3. Liquidity event: New York sweeps below prior day low (liquidity grab)
  4. FVG/OB zone: bullish FVG or OB in discount forms after the sweep
  5. RSI confirmation: RSI crosses back above 30 from oversold
  6. Volume check: volume spike on the displacement candle that created the FVG/OB
  7. Entry:
    • Long from the FVG/OB zone
    • Stop below the structure low
    • Target 2–3R or opposing liquidity

Each step can be:

  • Expressed in plain English
  • Converted into Pine Script conditions
  • Tested and refined over historical data

HorizonAI’s job is to handle the translation and wiring between all of these components.

Use HorizonAI to Automate SMC + Indicator Strategies

Hand‑coding hybrid SMC + indicator systems is time‑consuming:

  • Structure (BOS/CHOCH)
  • Liquidity (session highs/lows, prior day levels)
  • OB/FVG logic
  • EMA/RSI/volume conditions
  • Risk management and logging

With HorizonAI you can:

  • Describe your model in natural language
  • Generate Pine Script v6 strategies and indicators that:
    • Detect SMC structure and liquidity events
    • Apply EMA, RSI, and volume filters
    • Manage risk and calculate performance metrics
  • Iterate quickly across markets and timeframes

Example prompts:

"Create a Pine Script v6 strategy for EURUSD 15m that trades SMC-style liquidity grabs only in the direction of a 4H bullish trend, with 50/200 EMA filters, RSI confirmation from oversold, and volume spike validation."

"Build a hybrid indicator that marks order blocks and FVGs, but only highlights them when they align with EMA trend and above-average volume."

"Generate a backtest that compares pure SMC entries vs SMC + EMA/RSI filters over the same EURUSD dataset."

Build hybrid SMC + indicator systems with HorizonAI →

Final Thoughts

You don’t have to choose between “pure SMC” and “indicator trading.”
Some of the best systems:

  1. Use SMC to define structure, liquidity, and key zones
  2. Use indicators (EMA, RSI, volume) as objective filters around those zones
  3. Keep rules simple enough to describe and test
  4. Let automation handle the complexity while you focus on logic
  5. Continuously backtest and refine instead of relying on screenshots

Once you have a hybrid idea you like, HorizonAI can help you turn it into Pine Script, backtest it on your favorite markets, and quickly see whether the combination of SMC and indicators truly improves your edge.

Questions about specific hybrid setups you’re thinking about? Join our Discord community to share charts and ideas with other traders.