Supertrend Liquidity Engine

The Supertrend Liquidity Engine indicator provides a dynamic approach to trend following by replacing fixed ATR multipliers with an adaptive system based on prior session volatility. It aims to eliminate the guesswork involved in setting stop-loss levels by automatically adjusting to current market conditions, while simultaneously highlighting liquidity-aware zones for better entry and exit timing.

Usage

The tool can be utilized across various assets and timeframes to establish context-aware trailing stops. Users can switch between "Scalping" and "Trending" modes via a simple toggle to better suit their trading style:

• Trending Mode: Adjusts the factor to allow trades more "breathing room," suitable for long-term swings and macro trends.
• Scalping Mode: Tightens the stop-loss logic for faster moves during lower-volatility or consolidation phases.

The script also features Liquidity Zones, which visualize the area between price and the Supertrend line. These zones help traders identify where price might pull back to collect orders before resuming a trend, providing visual cues for re-entries. Additionally, the Trending Liquidity Histogram at the bottom of the chart acts as a strength gauge, signaling potential exhaustion when bars weaken or approach the zero line.

Details

This implementation is based on the foundational work of Olivier Seban but extends it with adaptive volatility logic. Instead of relying on a static multiplier, the engine uses a 4-zone model comparing the current ATR to the ATR of the previous session (e.g., Daily). This "anchoring" ensures that the volatility calculation is based on a fully-formed price structure rather than reactive mid-session data.

The script also includes a smoothing function that applies to ATR, Support, Resistance, and Stophunt levels. This helps reduce market noise and provides a cleaner visual output for the moving average and liquidity zones.

Settings

ATR Settings

• Length: The lookback period used for ATR calculations.
• Smoothing: Select the moving average type (RMA, SMA, EMA, WMA, VWMA) to smooth the indicator values.
• Select Timeframe: The timeframe used to anchor the "prior session" volatility.

Trading Style

• Scalping or Trending Stoploss: Toggle to switch the logic between tight scalping stops and wider trending stops.
• Show Moving Average: Enables a visual moving average on the chart based on the chosen smoothing method.

Sentiment & Histogram

• Bullish/Bearish Sentiment: Configuration for visibility and colors of Support, Resistance, and Stophunt levels.
• Trending Liquidity Histogram: Customization for the strength/exhaustion bars used to gauge move power.

FAQ

How do I use the Scalping vs. Trending toggle?

Use the toggle in the settings menu to invert the adaptive factor logic. Trending mode is best for capturing large moves, while Scalping mode is designed for tighter risk management in lower-volatility environments.

What is the purpose of the Liquidity Zone?

The Liquidity Zone highlights the area where price frequently "stophunts" or collects orders before continuing a trend, helping you avoid premature exits.

How can I access this script?

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