Smart Money Setup 06 Liquidity Sweeps + OB + 5th Swing

The Smart Money Setup 06 [TradingFinder] Liquidity Sweeps + OB + 5th Swing tool identifies institutional-grade liquidity expansion patterns to highlight potential market reversals and high-probability order blocks.

Usage

The script automates the identification of a specific "Expanding Triangle" setup often used in Smart Money Concepts (SMC). This setup occurs when price creates five consecutive swings that sweep previous highs and lows, effectively triggering stop losses in a "cash area" before the real trend move begins.

• Bullish Setup: Look for the indicator to identify a sequence of expanding lower lows and higher highs. A buy signal is generated when price crosses back above the designated resistance point, confirming the liquidity sweep is complete.
• Bearish Setup: Look for expanding higher highs and lower lows. A sell signal triggers when price crosses back below the designated support point.

Users can combine these signals with the automatically plotted Order Blocks (OB) to find precise entry points within the identified expansion range.

Details

The indicator tracks price action through pivot points to determine market structure. It classifies swings into Higher Highs (HH), Higher Lows (HL), Lower Highs (LH), and Lower Lows (LL).

The "Setup 06" logic specifically looks for a sequence where the 5th swing expands beyond the previous range, creating a liquidity trap. Once this expansion is confirmed and price retraces into the structure, the indicator marks the relevant Order Block. The construction uses a modular refiner to adjust the sensitivity and width of these blocks based on volatility and user preference.

Settings

• Pivot Period: Determines the lookback period for identifying swing highs and lows. Smaller values result in more frequent, shorter-term setups, while larger values identify macro structures.
• Order Block Refine: A toggle to enable or disable the refinement of Order Block widths. When "On," the script attempts to narrow the zone for better risk-to-reward ratios.
• Refine Mode:
  • Defensive: Reduces the width of the Order Blocks. This results in fewer trades but provides a higher potential reward-to-risk ratio.
  • Aggressive: Increases the width of the zones. This leads to a higher fill rate for positions but may result in larger stop-loss distances.

FAQ

How do I access Smart Money Setup 06 [TradingFinder] Liquidity Sweeps + OB + 5th Swing?

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

What is the best timeframe for this indicator?

While it works on all timeframes, the effectiveness depends on the "Pivot Period" setting. Smaller periods are better suited for scalping on lower timeframes, while larger periods are ideal for swing trading on daily or H4 charts.

What does the "5th Swing" represent?

The 5th swing represents the final expansion or "liquidity sweep" in a broadening pattern. It is designed to capture the moment when smart money has cleared out retail stop orders before reversing the trend.