IU Liquidity Sweep indicator

The IU Liquidity Sweep indicator is an institutional-style price action tool designed to automatically identify liquidity zones and detect stop hunts formed around significant swing highs and lows.

Usage

The Usage section describes how the script can be used to navigate institutional price action. Traders can utilize the indicator to spot high-probability reversal areas by monitoring how price interacts with the dynamically generated zones.

Key application examples include:

• Liquidity Sweep Confirmation: Look for "B" (Bullish) or "S" (Bearish) labels, which indicate that price has swept the liquidity beyond a zone's boundary before closing back within or above/below it.
• Zone Interaction: Monitor price behavior when it enters the highlighted demand or supply zones; the candles will change color to match the zone, signaling active institutional interest.
• Entry Timing: Improve timing by entering trades after a sweep rejection rather than chasing initial breakouts that might be retail traps.
• SMC & ICT Strategies: This tool integrates seamlessly with Smart Money Concepts, helping to visualize where market participants might be trapped or where large orders are being filled.

Details

The IU Liquidity Sweep indicator utilizes pivot point logic to establish supply and demand zones based on recent swing structure. Unlike static support and resistance levels, these zones are dynamic:

• Active Management: The indicator tracks only active zones. If price breaks through a zone entirely (invalidation), the zone is removed from the chart to prevent clutter.
• Sweep Detection: The logic specifically identifies "sweeps" or "grabs," where price moves past the extreme of a zone (the high of a supply zone or the low of a demand zone) but fails to sustain that breakout, often resulting in a sharp reversal.
• Efficiency: The script uses array-based management to limit the number of active boxes displayed, ensuring chart performance remains high while focusing on the most recent and relevant price action.

Settings

Indicator Settings

• Swing Length: Defines the number of bars used to detect pivot highs and lows for zone creation.
• Maximum Bullish Active Sweeps: Sets the maximum number of active bullish (demand) zones to display on the chart.
• Maximum Bearish Active Sweeps: Sets the maximum number of active bearish (supply) zones to display on the chart.

Color Settings

• Bullish Zone Color: Sets the visual color for demand zones.
• Bearish Zone Color: Sets the visual color for supply zones.
• Bull Zone Candle Color: Changes the candle color when price is trading inside a bullish liquidity zone.
• Bear Zone Candle Color: Changes the candle color when price is trading inside a bearish liquidity zone.

FAQ

How do I access the IU Liquidity Sweep indicator?

You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.

What is the difference between a "Zone" and a "Sweep"?

A zone represents the area between the swing point high/low and the candle body, marking potential liquidity. A sweep occurs when price penetrates the extreme edge of that zone and then reacts, signaling a potential stop hunt.

Why do some zones disappear from my chart?

The indicator is programmed to automatically invalidate and remove zones once price has significantly breached them, ensuring you only focus on active liquidity levels that haven't been "cleared" yet.