Swing Liquidity Zones

The Swing Liquidity Zones indicator tracks confirmed swing highs and lows to visualize wick-based liquidity areas, specifically identifying buy-side and sell-side interest derived from price action structure. This tool automates the process of mapping historical rejection points, helping traders maintain a clear view of significant structural levels where price has previously reversed.

Usage

The Usage section describes how the script can be used to identify key areas of interest on the chart.

• Identifying Liquidity: The indicator plots "Buy-Side Liquidity" zones at the upper wicks of confirmed swing highs and "Sell-Side Liquidity" zones at the lower wicks of confirmed swing lows. These zones represent areas where resting orders or price rejections often cluster.
• Zone Tracking: As price moves, the indicator automatically extends these zones to the right. When price re-enters a zone, the script visually adjusts it to distinguish between the "filled" (already traded through) and "unfilled" portions.
• Structure Filtering: By using the "Clean Alternating Swing Filter," users can focus on significant structural shifts by hiding minor fluctuations and ensuring a more readable sequence of highs and lows.
• Estimated Value: Users can enable estimated wick values, which calculate a relative score based on candle volume and wick size to help compare the potential significance of different liquidity zones.

Details

The script utilizes pivot logic to confirm swings, requiring a specific number of candles to close on either side of a peak or trough. Because of this confirmation period, zones are plotted retroactively on the pivot candle once the condition is met.

The construction of zones is based strictly on candle geometry:

• Swing High Zones: Spans the area between the candle body high and the candle wick high.
• Swing Low Zones: Spans the area between the candle body low and the candle wick low.

The Clean Swing Filter optimizes the layout by ensuring that if multiple swing highs occur before a swing low is confirmed, only the highest peak is maintained. Conversely, if multiple swing lows occur before a swing high, only the lowest point is kept. This logic, combined with minimum bar spacing and ATR-based distance requirements, prevents chart clutter during choppy price action.

Settings

General Settings

• Use Clean Alternating Swing Filter: Enables logic to filter out minor swings and maintain a strictly alternating sequence of the most significant highs and lows.
• Show Swing High/Low Text: Toggles the visibility of text labels marking confirmed pivots.
• Show Liquidity Zones: Enables or disables the plotting of wick-based liquidity boxes.
• Show Estimated Wick Value: Displays a relative value on the zone based on volume and price action data.
• Hide Filled Zone Areas: When enabled, parts of the zone that price has already traded through will be hidden from view.
• Swing High/Low Text: Customizable text strings for pivot labels.

Color Settings

• Swing High/Low Text Color: Sets the color for the pivot labels.
• Buy-Side/Sell-Side Liquidity Zone: Adjusts the background color for the respective liquidity areas.
• Zone Border Colors: Adjusts the border colors for buy-side and sell-side zones.
• Filled Zone/Border Color: Sets the visual style for areas where price has already traded through the liquidity zone.

FAQ

How do I use the estimated wick value? The value is a relative comparison tool calculated from volume and wick proportions. It is used to identify zones with higher relative historical activity but does not represent actual order book depth or resting liquidity.

Why are the zones plotted with a delay? The script uses pivot-based logic which requires several bars to close to the right of a peak or trough to confirm it is a valid swing. This ensures the structure is confirmed before a zone is drawn.

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