ICT Setup 04 SFP Sweep Liquidity Fake CHoCH/BOS

The ICT Setup 04 SFP Sweep Liquidity Fake CHoCH/BOS indicator identifies high-probability reversal points by detecting liquidity sweeps and reactions within predefined institutional zones.

Usage

The indicator is used to find "sniper" entry points where institutional players trap retail traders through liquidity hunts. It specifically identifies clean swing highs and lows and draws a reaction zone around them.

• Long Setups: Look for the indicator to detect a swing low and draw a bullish reaction zone. A signal is triggered when price sweeps below the swing low but forms a confirmation candle (like a doji) that closes back inside the zone.
• Short Setups: Look for the indicator to detect a swing high and draw a bearish reaction zone. A signal is triggered when price sweeps above the swing high but fails to hold, closing back within the reaction zone.

This tool is particularly effective for scalping or intraday trading when aligned with the overall market structure and institutional order flow.

Details

The script operates on the principle of the Swing Failure Pattern (SFP). It constructs reaction zones based on the relationship between the swing point (high or low) and the highest/lowest open or close of that swing candle.

• For Short Setups: The zone is drawn between the swing high and the maximum of that candle’s open or close.
• For Long Setups: The zone is drawn between the swing low and the minimum of that candle’s open or close.

A valid signal requires price to return to this zone, perform a liquidity sweep (breaking the previous high/low), and fail to maintain that breakout by closing a small-bodied candle back inside the zone. This sequence filters out standard breakouts and focuses on "fakeouts" that precede strong reversals.

Settings

Logical Settings

• Swing Period: Sets the lookback period used to detect valid swing highs and lows.
• Max Swing Back Method: Choose between "All" or "Custom" to determine how many historical swings the indicator evaluates.
• Max Swing Back: The specific number of historical swings to check if the custom method is selected.
• Maximum Distance Between Swing and Signal: Limits how many candles can pass between the initial swing point and the eventual reversal signal to ensure relevance.

Display Settings

• Show All/High/Low SLF: Toggles the visibility of specific signal types.
• Color Settings: Allows customization of labels and reaction zone lines for both bullish and bearish setups.

Alert Settings

• Alert: Toggles the alert system on or off.
• Message Frequency: Configures how often alerts trigger (All, Once Per Bar, or Per Bar Close).
• Show Alert Time by Time Zone: Sets the timestamp format for alert messages.

FAQ

How do I interpret the reaction zones? The reaction zones represent areas of institutional interest. If price enters these zones and fails to sustain a breakout, it indicates a high probability of a reversal due to a liquidity sweep.

Can I use this for any asset class? Yes, the indicator is designed for liquidity-driven markets including Forex, Cryptocurrencies, and Indices.

How do I access ICT Setup 04 SFP Sweep Liquidity Fake CHoCH/BOS? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.