Institutional Liquidity Sweep Engine

The Institutional Liquidity Sweep Engine indicator identifies liquidity sweeps occurring above confirmed swing highs and below confirmed swing lows using a multi-factor scoring model. It aims to filter market noise and highlight high-probability rejection events by validating price action with ATR-normalized measurements and volume confirmation.

Usage

The Usage section describes how the script can be used to identify potential reversal points based on liquidity hunts.

• Bullish Liquidity Sweep (SSL): Occurs when price breaches a confirmed swing low (Sell-Side Liquidity) and rejects back above it. This is often viewed as institutional buying after triggering sell stops.
• Bearish Liquidity Sweep (BSL): Occurs when price breaches a confirmed swing high (Buy-Side Liquidity) and rejects back below it. This is often viewed as institutional selling after triggering buy stops.
• Sweep Quality Score (SQS): Every sweep is assigned a score from 1 to 4 based on wick penetration depth, rejection strength, volume participation, and candle displacement. Users should focus on scores of 3 or 4 for higher-probability setups.
• Liquidity Memory Zones: After a sweep occurs, the script can plot a "Memory Zone" that acts as a visual reference for the area where liquidity was grabbed, helping traders identify potential support or resistance in subsequent price action.

Details

The engine tracks confirmed swing highs and lows as potential liquidity pools. When price breaches a tracked level and subsequently rejects back through it within the same candle, the event is evaluated using a four-factor scoring model:

1. Wick Penetration: Measures how far the wick extended beyond the liquidity level relative to ATR.
2. Rejection Strength: Measures the distance from the candle extreme back to the close.
3. Volume Participation: Checks if the sweep occurred on above-average volume.
4. Displacement: Evaluates if the candle body closed favorably relative to the prior candle's midpoint.

The tool uses non-repainting pivot confirmation logic, ensuring that liquidity levels are only established after a set number of bars (Swing Length) have passed.

Settings

Liquidity Pool Detection

• Swing Length: The number of bars required to confirm a pivot high or low. Higher values identify more significant macro levels.
• Level Memory (bars): The maximum age of a pivot level before it expires and is no longer tracked for sweeps.

Sweep Quality Filter

• Minimum Quality Score (1–4): The threshold for displaying sweeps. Higher scores filter out minor or "weak" liquidity grabs.
• ATR Length: The period used for Average True Range calculations to normalize penetration and rejection.
• Min Wick Penetration (× ATR): Minimum distance price must travel beyond the level to be considered a sweep.
• Min Rejection Strength (× ATR): Minimum required distance between the candle's extreme and its close.
• Volume Confirmation: When enabled, requires volume to exceed a moving average to contribute to the SQS.

Liquidity Memory Zones

• Show Memory Zones: Enables the drawing of boxes at the site of detected sweeps.
• Zone Depth (× ATR): The vertical height of the memory zone box.
• Zone Lifespan (bars): How long the zone remains visible on the chart.

FAQ

How do I access Institutional Liquidity Sweep Engine?

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

What is a "Strong" vs "Weak" sweep?

A strong sweep meets the user-defined Minimum Quality Score (typically 3 or 4), suggesting higher institutional participation. A weak sweep (SQS 1-2) may be a minor stop run with less follow-through.

Does this indicator repaint?

No, the indicator uses confirmed pivot logic. While the pivots themselves require a delay (defined by Swing Length) to be confirmed, the sweep signals are generated in real-time once a confirmed level is breached and rejected.