Cascade Liquidity Zones

The Cascade Liquidity Zones indicator is a comprehensive institutional liquidity detector designed to identify supply and demand zones where large market participants absorb retail stop orders before price reversals. It utilizes a proprietary scoring system to qualify zones and confirms sweep events through a multi-filter engine to provide high-probability structural entry frameworks.

Usage

The indicator automatically plots demand and supply zones based on pivot-impulse structures. These zones serve as the primary areas for anticipating institutional activity.

• Identifying Zones: Fresh zones (those not yet swept) are displayed with a "glow" effect. Higher scores and liquidity values indicate stronger institutional interest.
• Sweep Confirmation: A long signal occurs when price penetrates a demand zone with its wick, meets volume and rejection requirements, and closes back above or within the zone. A short signal occurs when price sweeps a supply zone and closes back below or within it.
• Failure Entries: If enabled, this secondary mode detects simple pivot-level failures. This occurs when price wicks beyond a recent structural pivot and immediately reverses, targeting trapped participants.
• Zone Flipping: If price closes entirely through a zone, the indicator flips its polarity (e.g., a broken demand zone becomes a supply zone), reflecting the concept of support turning into resistance.
• Trade Management: When a signal confirms, the script renders a trade block with an entry price, stop loss (SL), and two take-profit (TP) levels.

Details

The script's execution is centered around three core pillars:

1. Impulse Quality Score: Every zone is scored (0–100) based on directional conviction (body size), relative volume, and range size relative to the ATR at the time of creation.
2. Liquidity Valuation: Unlike standard pivot tools, this script calculates the cumulative product of volume and price at the zone's origin, providing a dimension of "institutional sizing."
3. Visualization Mechanics: It uses four concentric boxes with varying opacities to create a depth effect, making it easier to visualize the "gravity" of the liquidity cluster. It also tracks a "Hold Percentage" to show how many times a zone has been tested successfully.

Settings

Zone Detection

• Pivot Lookback: The number of bars required on each side to confirm a structural pivot.
• Max Active Zones/Side: Limits the number of demand or supply zones displayed simultaneously to maintain chart clarity.
• Zone ATR Width: Sets the vertical height of the zone as a multiple of the ATR.
• Min Zone Separation (ATR): The minimum distance required between zones; overlapping zones are deduplicated based on quality scores.
• Enable Zone Flip: When enabled, broken support zones convert to resistance and vice versa.

Sweep Confirmation

• Min Wick Penetration %: The minimum percentage the candle wick must penetrate the zone boundary to qualify as a sweep.
• Volume Confirmation & Multiple: Filters signals based on whether the sweep bar’s volume exceeds the average by a specified multiple.
• Wick Rejection Filter: Requires the candle to have a minimum rejection percentage (wick size relative to total candle range).
• Cooldown Bars: The number of bars to wait after a signal before another can be generated.

Failure Entry

• Enable Failure Entry Mode: Toggles the secondary pivot-wick failure detection logic.
• Min Failure Wick ATR: The minimum size the sweeping wick must reach, measured in ATR units.

Trade Block

• RR Ratio: Sets the risk-to-reward ratio for the secondary take-profit level.
• SL Mode: Determines if the stop loss is placed at the zone boundary or the extreme of the sweeping wick.

FAQ

How do I interpret the Liquidity Value labels? The labels (K, M, B) represent the volume multiplied by the price at the pivot origin. Higher values indicate that more capital was involved in the creation of that structural level, often leading to stronger institutional reactions.

Why did a sweep happen without a signal appearing? Signals are only confirmed on the bar close to prevent repainting. If the volume, wick rejection, or penetration depth does not meet your specific input thresholds at the moment of the bar close, no signal will be triggered.

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