Liquidity Entry Zones strategy 2.0

The Liquidity Entry Zones strategy 2.0 indicator provides a comprehensive liquidity-sweep entry framework designed to identify high-probability reversals after price sweeps major pivot levels. It visualizes key liquidity zones, validates reclaim behavior, and offers a built-in trade simulation tool to project potential outcomes.

Usage

The Usage section describes how the script can be used to identify entry points based on liquidity dynamics.

Liquidity Sweeps

The script monitors recent pivot highs and lows to establish liquidity levels. A potential long signal is initiated when price sweeps below a pivot low and then reclaims that level. Conversely, a potential short signal occurs when price sweeps above a pivot high and reclaims it.

Confirmation Logic

To filter out false breakouts, the script uses a confirmation window. A signal is only generated if:

• The reclaim occurs within a user-defined number of bars after the sweep.
• Candle quality metrics (wick percentage and body size) meet the specified thresholds.
• Price breaks the midline of the sweep candle (optional).

Trend Filtering

Users can enable a built-in EMA filter to ensure they are only trading in the direction of the primary trend. For example, longs will only be considered if price is above the EMA, and shorts if price is below the EMA.

Details

The script operates on a multi-stage validation process:

1. Detection: It stores up to 100 recent liquidity levels.
2. Validation: When a level is breached, it checks if the "Sweep Distance" is sufficient to be considered a genuine liquidity grab rather than just a minor breach.
3. Quality Control: It calculates a "Quality Score" (0-100) based on how much of the candle is wick versus body. High wick percentages typically suggest strong rejection of the level.
4. Projection: If the trade simulation is enabled, the script plots fixed Take Profit (TP) and Stop Loss (SL) lines. Note that if both TP and SL are hit on the same bar, the simulation prioritizes the Stop Loss for conservative reporting.

Settings

Trend Filter

• EMA Length: Sets the period for the trend-filtering EMA.
• Use EMA Trend Filter: Toggles whether signals must align with the EMA direction.

Liquidity Sweep Detection

• Swing Pivot Length: The lookback period used to identify high/low pivot points.
• Stored Liquidity Levels: The number of historical levels the script keeps in memory.
• Minimum Sweep Distance (Pips): The minimum distance price must travel past a level to count as a sweep.
• Reclaim Rule: Choose between a simple close back inside the level or a "Strong Reclaim" requirement.

Candle Quality Filters

• Minimum Sweep Wick %: The minimum percentage of the candle that must be a wick to indicate rejection.
• Maximum Body %: The maximum allowable size of the candle body relative to its total range.
• Minimum Candle Range (Pips): Filters out insignificant price action by requiring a minimum candle size.

Trade Projection

• Enable Internal Trade Simulation: Toggles the plotting of TP/SL targets and the status panel.
• Take Profit / Stop Loss (Pips): Defines the fixed distances for the simulation.
• Block Signals In Trade: When enabled, the script will not generate new signals until the current simulated trade is closed.

FAQ

How do I interpret the Quality Score in the status panel? The score ranks the "perfection" of the setup based on wick size, body size, and trend alignment. A score above 75 (Green) indicates a high-quality rejection, while a score below 55 (Red) suggests a weaker or higher-risk setup.

Why did a signal disappear or not trigger at a level? Signals are confirmed only on the bar close. Additionally, if you have "Cooldown Bars" or "EMA Filter" active, the script may skip valid-looking sweeps that do not meet those secondary criteria.

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