Liquidation Levels with Liquidity Sweeps/Breakouts

The Liquidation Levels with Liquidity Sweeps/Breakouts indicator provides a comprehensive framework for identifying key market liquidity pools and the subsequent price reactions when those levels are tested or breached. By tracking swing pivots across various timeframes, the tool helps traders pinpoint potential reversal zones (sweeps) and high-momentum continuation signals (breakouts) supported by volume analysis.

Usage

The tool is designed to identify "trapped" liquidity and institutional activity at swing highs and lows.

• Liquidity Sweeps: When price moves beyond a previous swing level but fails to close past it, returning inside the range, a sweep is identified. Bullish sweeps are marked with green diamonds below the low, and bearish sweeps with red diamonds above the high. These often suggest a reversal as stop-losses have been triggered and the market is moving in the opposite direction.
• Liquidity Breakouts: A breakout occurs when price closes decisively beyond a liquidity level. If the High Volume Threshold is met, the chart background is highlighted, indicating a high-conviction breakout that may lead to trend continuation.
• Estimated Liquidations: If enabled, labels will appear during sweeps displaying a volume-based estimation of the liquidity "cleared" during that specific move.
• Timeframe Analysis: Users can apply a multiplier to analyze liquidity levels from higher timeframes without switching their base chart, providing a broader structural perspective.

Details

The indicator functions by monitoring swing pivots (highs and lows) and projecting them forward as horizontal liquidity levels. When price interacts with these levels, the script evaluates the candle's close and the relative volume.

A "sweep" occurs if the high or low penetrates the level but the candle closes back within the previous range. A "breakout" is confirmed only if the close price is outside the level and the relative volume (current volume divided by a Simple Moving Average of volume) exceeds the user-defined threshold. This volume filter is crucial for distinguishing between genuine market expansion and low-liquidity "fakeouts."

Settings

TimeFrame Settings

• TimeFrame Multiplier: Multiplies the current chart timeframe to fetch liquidity data from higher intervals (e.g., 2 on a 15m chart uses 30m data). Set to 1 to use the current chart's timeframe.

Relative Volume Settings

• High Volume Threshold: The sensitivity for breakout confirmation. Higher values require more significant volume for a breakout to be highlighted.
• Relative Volume Period: The lookback period used to calculate the average volume baseline.

Liquidity Levels

• Remove Mitigated Lines From Chart: When enabled, liquidity lines are deleted once price has crossed them.
• Show Swept Liquidity: Toggles the visibility of volume labels during liquidity sweeps.
• Highlight Breakouts: Toggles the background color highlights for high-volume breakouts.

Appearance

• Bullish/Bearish/Breakout Colors: Customizable colors for bullish levels/sweeps, bearish levels/sweeps, and breakout highlights.

FAQ

• How can I see liquidity from a specific higher timeframe? Adjust the "TimeFrame Multiplier" in the settings. For example, if you are on a 1-hour chart and want to see 4-hour liquidity, set the multiplier to 4.
• Why am I not seeing background highlights for every breakout? The background highlight requires the breakout to be accompanied by a volume spike that exceeds the "High Volume Threshold." Try lowering this threshold if you want to see more frequent highlights.
• How do I access Liquidation Levels with Liquidity Sweeps/Breakouts? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.