ICT Liquidity Levels [TakingProphets]

Overview

This indicator is designed to dynamically identify and display key liquidity levels—areas where market participants are likely to engage. By analyzing price swing points, it highlights potential support and resistance zones that can signal reversals or breakouts. The script distinguishes between buyside and sellside liquidity levels, presenting them with customizable visual cues and labels for immediate clarity.

How It Works

Swing Point Detection:
The indicator uses a pivot-based method (with a configurable “Base Swing Strength”) to detect swing highs and lows. Each detected swing is evaluated for its “swing size” (percentage price movement), and if it exceeds a user-defined threshold, the level is classified as major.

Level Creation and Classification:

Overview
Built on core ICT principles, this indicator identifies key liquidity zones—areas where market imbalances can lead to liquidity sweeps. By dynamically analyzing swing points, it offers traders a real-time view of where liquidity is clustering, allowing for a deeper understanding of market structure. 🚀

How It Works

Swing Point Detection 🔍
• Uses a pivot-based method with a configurable “Base Swing Strength” to detect significant price swings.
• Calculates the swing size (percentage change) to flag zones that exceed the “Major Level Threshold” as major liquidity zones.

Level Creation & Classification 🛠️
• Buyside Liquidity Levels (BSL):
  Identified from swing highs, marking zones where buying liquidity clusters.
• Sellside Liquidity Levels (SSL):
  Identified from swing lows, highlighting zones of concentrated selling liquidity.
• Each zone is stored with its price, bar index, and classification (major or standard) before being drawn as a horizontal line on the chart.

Dynamic Level Management 🔄
• Extension: Liquidity lines automatically extend from their detection point to the current bar.
• Consolidation: When levels are close in price, the script merges them—updating labels (e.g., “REQH” or “REQL”) to denote unified liquidity zones.
• Traded-Through Detection: Adjusts or removes levels if the market moves beyond them, based on your settings.
• Age-Based Cleanup: Inactive zones are automatically removed after a set number of bars to maintain clarity.

Customization Options ⚙️

Visual Settings:
• Choose from solid, dashed, or dotted line styles and adjust line width.
• Option to display labels with customizable placement (left or right) for optimal clarity.

Color & Opacity:
• Set distinct colors for buyside and sellside liquidity zones.
• Configure opacity for zones that have been traded through, keeping them visible yet de-emphasized.

Detection & Cleanup Parameters:
• Adjust “Base Swing Strength” to control pivot detection sensitivity.
• Set the “Major Level Threshold %” to filter for significant liquidity zones.
• Decide whether to retain or remove zones once price moves through them.
• Define how many bars should pass before inactive zones are automatically deleted.

How to Use 🚀

Apply the Indicator:
Simply add the script to your chart—it automatically detects and marks key liquidity zones based on recent price action.

Adjust Inputs:
Fine-tune parameters like swing strength, threshold percentages, and visual settings to match the asset’s characteristics and your trading strategy.

Interpret the Visuals:
• Major Liquidity Zones:
  Highlighted with thicker lines and distinct labels (e.g., “Major BSL/SSL”), indicating areas of heightened liquidity concentration.
• Consolidated Zones:
  Merged labels (e.g., “REQH/REQL”) denote unified liquidity zones where clustering is significant.
• Traded-Through Zones:
  Changes in opacity signal that the market has moved beyond a previously identified liquidity zone.

Underlying ICT Concepts 💡

Liquidity Pools & Sweeps:
Focused on identifying where liquidity is concentrated, the indicator aligns with ICT methodologies that highlight zones crucial for liquidity sweeps.

Pivot Analysis for Liquidity:
Enhances traditional pivot detection to spotlight liquidity clusters, providing a deeper insight into market structure.

Real-Time Adaptation:
With continuous updates and built-in cleanup, the indicator ensures that liquidity zones accurately reflect current market conditions.