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Analyzing Institutional Market Structure: A Top-Down SMC Guide

Step-by-step guide: how to analyze Smart Money Concepts (SMC) using Diplyzer — identifying structural bias, Order Blocks, and Fair Value Gaps across multi-timeframe charts.

This tutorial walks through mapping institutional market structure from higher timeframe trends down to intraday liquidity pools — an objective top-down process used by technical analysts and quantitative researchers.

The Top-Down SMC Framework

A disciplined SMC workflow evaluates market structure from the top down, analyzing direction across timeframes before inspecting granular price action:

  1. Weekly/Daily → Structural bias (is the higher timeframe bullish or bearish?)
  2. Daily/4-Hour → Find key institutional levels (OBs, FVGs, liquidity pools)
  3. 1-Hour/15-Minute → Inspect session volume and liquidity sweeps (London/NY session windows)

Let's walk through this for EURUSD (the same quantitative methodology applies to equities, crypto, and commodities).

Step 1: Establish the Higher Timeframe Bias

Start on the weekly chart to understand the macro trend:

AI Prompt

"Show me the weekly chart structure for EURUSD over the last 6 months. Is the market making higher highs and higher lows (bullish), lower highs and lower lows (bearish), or ranging? Mark the most recent BOS and CHOCH events."

Run Prompt

Then drop to the daily chart to inspect the intermediate structure:

AI Prompt

"Show me the daily chart structure for EURUSD over the last 3 months. What is the current swing structure? Are the daily BOS events aligned with the weekly bias?"

Run Prompt

Step 2: Identify Key SMC Levels

With the bias established, map the institutional levels on the daily chart:

AI Prompt

"On the EURUSD daily chart, identify: (1) all unmitigated bullish order blocks within the current discount zone (below the 50% retracement of the last major swing), (2) any fair value gaps that have not been filled yet within that same zone, and (3) any equal low liquidity (sell-side liquidity) that price might sweep before reversing upward."

Run Prompt

This gives you a clear structural map:

  • Where price has historically encountered institutional volume (OBs and FVGs in the discount zone)
  • What liquidity pools exist above and below the current market price

Step 3: Define Key Structural Levels

From the key SMC levels identified, map the relevant price zones:

Institutional Accumulation Zone: The unmitigated OB and/or FVG in the discount zone — the historical price band with unfilled orders.

Structural Invalidation: Below the OB low. A close below this level indicates a shift in market structure.

Liquidity Target 1: The nearest buy-side liquidity level above — equal highs or prior swing highs.

Liquidity Target 2: The higher structural resistance level on the multi-week timeframe.

Step 4: Inspect Intraday Price Action

Once price approaches your daily OB zone, drop to the 4-hour chart for structural inspection:

AI Prompt

"On EURUSD's 4-hour chart, is price currently at or approaching the daily bullish order block? Are there any 4-hour order blocks or FVGs within the daily OB zone that provide higher structural resolution?"

Run Prompt

Then drop further to the 1-hour chart for session volume context:

AI Prompt

"On the EURUSD 1-hour chart, is price approaching the support zone during a major session window (London Open 07:00-09:00 UTC or New York Open 12:00-14:00 UTC)? Has a sweep of a 1-hour equal low occurred?"

Run Prompt

Step 5: Price Action Reversals & Volume Confluence

Observe how price reacts around key historical order blocks:

Common Reversal Patterns:

  • Bullish Engulfing: A bearish candle followed by a larger bullish candle closing above the open
  • Hammer / Wick Rejection: Strong lower wick rejection indicating buyers defending the level
  • Liquidity Sweep: Price briefly sweeps below the equal lows (triggering sell stops), then closes back above the level on high volume
AI Prompt

"Has there been a liquidity sweep below the equal lows at [price level] on the EURUSD 1-hour chart? Did price close back above that level? Is there a bullish candle pattern forming?"

Run Prompt

The Complete SMC Research Request

Synthesize the full top-down analysis into one comprehensive query:

AI Prompt

"Full top-down SMC analysis for EURUSD: (1) weekly and daily structural bias with BOS/CHOCH events, (2) all unmitigated bullish OBs and unfilled FVGs in the discount zone on the daily chart, (3) equal low liquidity zones that may be swept, (4) 4-hour structure near the daily support zone, and (5) any 1-hour session patterns currently forming. Summarize the multi-timeframe confluence and key structural inflection levels."

Run Prompt

Adapting This Framework for Stocks and Crypto

For individual stocks:

AI Prompt

"Top-down SMC analysis for [stock]: daily chart structural bias, unmitigated order blocks in the discount zone, unfilled FVGs, and liquidity zones. What are the key institutional support and resistance levels to monitor?"

Run Prompt

For crypto (24/7 markets):

AI Prompt

"Full SMC breakdown on Bitcoin on the daily and 4-hour charts: structural bias, active OBs, FVGs, recent liquidity sweeps, and emerging structural patterns during New York trading hours."

Run Prompt