Liquidity Trap Reversal Pro (Radar v2)

The Liquidity Trap Reversal Pro (Radar v2) indicator identifies hidden liquidity traps at significant swing points using a combination of wick analysis, volume spikes, and non-repainting pivot detection. It aims to help traders find high-probability reversal setups by filtering out noise and focusing on confirmed price exhaustion events.

Usage

The Usage section describes how the script can be used to identify market turns.

• Trap High Signal: Indicates a potential bearish reversal where price has trapped buyers at a swing high before moving lower.
• Trap Low Signal: Indicates a potential bullish reversal where price has trapped sellers at a swing low before moving higher.
• Confirmed Signals: For better reliability, use the "Confirmed" markers (triangles). These only trigger after the price moves in the opposite direction of the trap, providing validation of the reversal.
• Trend Filtering: In a trending market, it is recommended to align traps with the prevailing bias. For example, focus on Trap Lows during an uptrend (price above EMA) and Trap Highs during a downtrend (price below EMA).
• Exhaustion Guard: Use this feature to avoid entering trades when the price is overextended. If the price has moved too many ATR units away from the mean, the script can suppress signals to prevent "chasing" the move.

Details

The script operates on a non-repainting basis. Pivots are identified using a lookback period, meaning signals appear once the pivot point is mathematically confirmed, preventing "future leaking."

The logic combines three primary criteria for a "Raw Trap":

1. Pivot Detection: A swing high or low based on the user-defined lookback.
2. Wick Analysis: The candle must have a significant wick relative to its body, indicating price rejection.
3. Volume Spike: The trap must occur on volume higher than the recent average, confirming institutional or significant participant interest.

Settings

Detection

• Pivot Lookback: The number of bars used to determine a swing high or low.
• Min Wick % of Candle: The minimum percentage of the candle's total range that must be comprised of a wick.
• Volume Spike Multiplier: How much higher the current volume must be relative to the 50-period SMA to qualify as a trap.
• Confirm Bars After Trap: The number of bars to check for a price move in the opposite direction before confirming the trap.
• Show Raw Trap Markers: Toggles the visibility of initial trap points before confirmation.
• Show Confirmed Trap Markers: Toggles the visibility of validated reversal signals.

Filtering

• Enable EMA Trend Filter: Filters signals based on the current timeframe's EMA.
• EMA Length: The lookback period for the trend EMA.
• Enable HTF EMA Trend Filter: Uses a higher timeframe EMA to filter signals for broader trend alignment.
• Trend Timeframe: The specific timeframe used for the HTF filter (e.g., Daily).
• Enable Exhaustion Guard (ATR Stretch): Blocks signals if the price is too far from the EMA.
• Max ATR Stretch from EMA: The multiplier for ATR that determines the exhaustion threshold.

FAQ

How do I access Liquidity Trap Reversal Pro (Radar v2)?

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

Does this indicator repaint?

No, the indicator uses a fixed lookback period for pivots. Once a pivot is confirmed and the signal appears on the chart, it remains fixed.

Which timeframes are best for this tool?

While it works on all timeframes, it is most effective on the 15-minute, 1-hour, and 4-hour charts where liquidity traps at swing points are more pronounced.