Zig Zag Liquidity Pools & Sweeps

The Zig Zag Liquidity Pools & Sweeps indicator provides a visual framework for identifying key market areas where stop orders and pending orders accumulate. By utilizing a Zig Zag structure to filter noise, it automatically detects significant pivot levels and projects them as horizontal liquidity lines until they are interacted with by price action.

Usage

The Zig Zag Liquidity Pools & Sweeps tool can be used to observe market dynamics across various timeframes and assets. It maps out potential stop-run areas and structural liquidity grabs, helping traders understand where the market might reverse or accelerate.

• Liquidity Pools: The indicator projects horizontal lines from significant pivot highs and lows. These lines represent areas of resting liquidity where stop-loss orders are often clustered.
• Liquidity Sweeps: When price trades through a projected liquidity level, the indicator marks the point with an 'X' symbol. This visual cue signals that a liquidity sweep has occurred, which is often a precursor to a change in market direction or a continuation of a strong trend.
• Analysis Tip: For a clearer view of the structural map, users can hide the price candles in TradingView settings (three dots next to the asset name > Hide). This allows for a focus purely on the Zig Zag connections and the resulting liquidity framework.

Details

The indicator relies on three core components to construct its analysis:

• Zig Zag Engine: A built-in logic that identifies the most relevant market swings based on user-defined deviation and depth settings. This filters out minor price fluctuations to highlight meaningful structure.
• Horizontal Projection: Pivots are projected forward as liquidity zones. These lines remain active until the market price "sweeps" or mitigates them.
• Sweep Identification: The script detects when a wick or a candle close (depending on settings) penetrates the level. This event marks the exhaustion of the pool.

Settings

Visual Engine (Zig Zag Line)

• Deviation (%): The percentage change required to confirm a new Zig Zag leg.
• Pivot Legs (Depth): The minimum number of bars required between pivots to define a swing.
• Line Color: Customizes the color of the Zig Zag structure.
• Show Reversal Price/Volume: Toggles the display of price and volume data on the Zig Zag waves.

Liquidity Levels (Macro)

• Pivot Strength (Left/Right): Determines the number of bars required on either side of a pivot for it to qualify as a liquidity level.
• Max Lines on Screen: Limits the number of active liquidity levels displayed to maintain chart clarity.

Sweep / Mitigation

• Invalidate Level On: Choose between "Wick" or "Close" to determine what price action triggers a sweep.
• Wait for Candle Close: If enabled, the sweep signal (X) only appears after the candle closes above/below the level to prevent repainting.
• Mitigated Levels: Choose to either remove or keep (in a faded style) levels that have already been swept.

FAQ

How can I access the Zig Zag Liquidity Pools & Sweeps 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 pool and a sweep?

A liquidity pool is a projected level where orders are expected to be resting, while a sweep is the actual event where price trades through that level, "clearing" the orders.

Does this indicator repaint?

By default, the sweep marker (X) can appear intrabar. To avoid this, enable the "Wait for Candle Close to Confirm Sweep" setting in the indicator inputs.