Liquidation Reversal Hunter ## Liquidation Reversal Hunter V2
### What This Indicator Does
Liquidation Reversal Hunter V2 identifies potential reversal zones where significant liquidation events have occurred. It detects abnormal volume spikes combined with large price wicks—conditions that often precede price reversals when leveraged positions are forcibly closed.
The indicator displays:
- **Horizontal zone lines** marking where major liquidations likely occurred
- **Buy/Sell signals** when price action suggests a reversal from these zones
- **Heatmap coloring** showing the relative importance of each zone
---
### How It Works: The Methodology
#### 1. Volume Anomaly Detection (Z-Score Analysis)
The indicator uses statistical z-score analysis to identify abnormal volume:
```
Z-Score = (Current Volume - Average Volume) / Standard Deviation
```
- A z-score ≥ 2.0 indicates volume is 2 standard deviations above average (occurs ~2.5% of the time)
- Higher z-scores indicate increasingly rare and significant volume events
- The lookback period (default 50 bars) establishes the baseline for comparison
This statistical approach adapts to each asset's typical volume profile rather than using fixed thresholds.
#### 2. Liquidation Size Estimation
Liquidation magnitude is estimated by combining volume with price range:
```
Liquidation Size = (Volume in Millions) × (High - Low)
```
This proxy metric captures the "energy" of the move—large volume combined with large price movement suggests significant position liquidation. The indicator then calculates a z-score for this metric to identify statistically significant events.
#### 3. Stop Hunt Pattern Detection
The indicator identifies "stop hunt" patterns—where price sweeps beyond recent swing highs/lows then reverses:
**Bullish Stop Hunt:**
- Price makes a new 5 or 10-bar low
- Candle closes bullish (above open)
- Close is in the upper portion of the range
- Lower wick exceeds body size (for strong patterns)
**Bearish Stop Hunt:**
- Price makes a new 5 or 10-bar high
- Candle closes bearish (below open)
- Close is in the lower portion of the range
- Upper wick exceeds body size (for strong patterns)
These patterns often indicate that stops were triggered before price reversed.
#### 4. Multi-Factor Signal Strength Scoring
Each potential signal is scored on a 0-10 scale based on:
| Factor | Points | Logic |
|--------|--------|-------|
| Volume Z-Score | 0-2 | Higher abnormality = more points |
| Liquidation Magnitude | 0-2 | Larger events = more points |
| Stop Hunt Pattern | 0-2.5 | Strong patterns get bonus points |
| RSI Momentum | 0-1 | Oversold/overbought confirmation |
| Wick Rejection | 0-1.5 | Larger wicks indicate stronger rejection |
| Divergence (optional) | 0-1 | RSI/MACD divergence confirmation |
Signals only trigger when the combined score meets the minimum threshold (default: 2).
#### 5. Smart Zone Cleanup System
Unlike static level indicators, zones are dynamically managed:
- **Tagging**: When price touches a zone, it's marked as "tagged"
- **Sweep Removal**: When price closes beyond a zone, it's removed (level has been "taken out")
- **Time Decay**: Zone importance decays over time (default: 1% per bar)
- **Age Limits**: Old zones are removed unless they maintain high importance
This prevents chart clutter from stale levels.
---
### Why These Components Work Together
The indicator combines three distinct edge concepts:
1. **Volume Anomalies** identify when unusual activity is occurring—often institutional or liquidation-related
2. **Stop Hunt Patterns** identify the specific price action signature of liquidity grabs
3. **Statistical Thresholds** ensure only significant events are flagged, reducing false signals
The combination is more effective than any single approach:
- Volume alone would flag many non-reversal events
- Wicks alone would miss the volume context
- Stop hunts alone might catch minor moves
Together, they filter for high-probability reversal setups where:
- Significant volume entered the market
- Price made an extreme move (likely triggering stops)
- Price action rejected the extreme (wick formation)
---
### How to Use This Indicator
**For Entries:**
1. Wait for a signal flag to appear
2. Confirm with your own analysis (trend, structure, etc.)
3. Consider the zone line as a potential support/resistance level
**For Zone Analysis:**
- **Brighter/thicker lines** = higher importance zones
- **Green zones** = short liquidations occurred (potential support)
- **Red zones** = long liquidations occurred (potential resistance)
- **Dashed lines** = zones that have been tested (tagged)
**Recommended Settings:**
- Lower timeframes (1m-15m): Use stricter filters, fewer max lines
- Higher timeframes (1H+): Can use default or relaxed settings
- High volatility: Increase z-score threshold
- Low volatility: Decrease thresholds
**Best Practices:**
- Use with trend analysis—reversals are higher probability with trend
- Don't trade every signal—use as confluence with other analysis
- Monitor zone reactions—price behavior at zones provides information
---
### Input Settings Explained
**Liquidation Detection:**
- Volume Multiplier: How many times above average volume must be
- Z-Score Threshold: Statistical significance level (2.0 = 95th percentile)
- Min Liquidation Size: Minimum estimated liquidation in millions
**Signal Quality:**
- Stop Hunt Detection: Enable sweep-and-reversal pattern detection
- Divergence Filter: Require RSI/MACD divergence (reduces signals)
- Momentum Filter: Require RSI oversold/overbought
- Signal Cooldown: Minimum bars between signals
**Zone Cleanup:**
- Tagged Zone Lifespan: Bars before tested zones disappear
- Max Zone Age: Oldest zones allowed
- Age Decay Rate: How fast importance decreases
---
### Limitations and Disclaimers
- This indicator identifies potential reversal zones, not guaranteed reversals
- Volume data quality varies by exchange and asset
- Works best on liquid assets with reliable volume data
- Past liquidation zones do not guarantee future reactions
- Always use proper risk management and position sizing
- This is a tool for analysis, not a complete trading system
---
### Summary
Liquidation Reversal Hunter V2 uses statistical analysis of volume anomalies, price action patterns, and dynamic zone management to identify where significant liquidation events have likely occurred. The multi-factor scoring system filters for higher-probability setups while the smart cleanup system keeps the chart clean and focused on relevant levels.
Liquidity-heatmap
Volume Bubbles & Liquidity Heatmap [LuxAlgo]The Volume Bubbles & Liquidity Heatmap indicator highlights volume and liquidity clearly and precisely with its volume bubbles and liquidity heat map, allowing to identify key price areas.
Customize the bubbles with different time frames and different display modes: total volume, buy and sell volume, or delta volume.
🔶 USAGE
The primary objective of this tool is to offer traders a straightforward method for analyzing volume on any selected timeframe.
By default, the tool displays buy and sell volume bubbles for the daily timeframe over the last 2,000 bars. Traders should be aware of the difference between the timeframe of the chart and that of the bubbles.
The tool also displays a liquidity heat map to help traders identify price areas where liquidity accumulates or is lacking.
🔹 Volume Bubbles
The bubbles have three possible display modes:
Total Volume: Displays the total volume of trades per bubble.
Buy & Sell Volume: Each bubble is divided into buy and sell volume.
Delta Volume: Displays the difference between buy and sell volume.
Each bubble represents the trading volume for a given period. By default, the timeframe for each bubble is set to daily, meaning each bubble represents the trading volume for each day.
The size of each bubble is proportional to the volume traded; a larger bubble indicates greater volume, while a smaller bubble indicates lower volume.
The color of each bubble indicates the dominant volume: green for buy volume and red for sell volume.
One of the tool's main goals is to facilitate simple, clear, multi-timeframe volume analysis.
The previous chart shows Delta Volume bubbles with various chart and bubble timeframe configurations.
To correctly visualize the bubbles, traders must ensure there is a sufficient number of bars per bubble. This is achieved by using a lower chart timeframe and a higher bubble timeframe.
As can be seen in the image above, the greater the difference between the chart and bubble timeframes, the better the visualization.
🔹 Liquidity Heatmap
The other main element of the tool is the liquidity heatmap. By default, it divides the chart into 25 different price areas and displays the accumulated trading volume on each.
The image above shows a 4-hour BTC chart displaying only the liquidity heatmap. Traders should be aware of these key price areas and observe how the price behaves in them, looking for possible opportunities to engage with the market.
The main parameters for controlling the heatmap on the settings panel are Rows and Cell Minimum Size. Rows modifies the number of horizontal price areas displayed, while Cell Minimum Size modifies the minimum size of each liquidity cell in each row.
As can be seen in the above BTC hourly chart, the cell size is 24 at the top and 168 at the bottom. The cells are smaller on top and bigger on the bottom.
The color of each cell reflects the liquidity size with a gradient; this reflects the total volume traded within each cell. The default colors are:
Red: larger liquidity
Yellow: medium liquidity
Blue: lower liquidity
🔹 Using Both Tools Together
This indicator provides the means to identify directional bias and market timing.
The main idea is that if buyers are strong, prices are likely to increase, and if sellers are strong, prices are likely to decrease. This gives us a directional bias for opening long or short positions. Then, we combine our directional bias with price rejection or acceptance of key liquidity levels to determine the timing of opening or closing our positions.
Now, let's review some charts.
This first chart is BTC 1H with Delta Weekly Bubbles. Delta Bubbles measure the difference between buy and sell volume, so we can easily see which group is dominant (buyers or sellers) and how strong they are in any given week. This, along with the key price areas displayed by the Liquidity Heatmap, can help us navigate the markets.
We divided market behavior into seven groups, and each group has several bubbles, numbered from 1 to 17.
Bubbles 1, 2, and 3: After strong buyers market consolidates with positive delta, prices move up next week.
Bubbles 3, 4, and 5: Strength changes from buyers to sellers. Next week, prices go down.
Bubbles 6 and 7: The market trades at higher prices, but with negative delta. Next week, prices go down.
Bubbles 7, 8, and 9: Strength changes from sellers to buyers. Next weeks (9 and 10), prices go up.
Bubbles 10, 11, and 12: After strong buyers prices trade higher with a negative delta. Next weeks (12 and 13) prices go down.
Bubbles 12, 14, and 15: Strength changes from sellers to buyers; next week, prices increase.
Bubbles 15 and 16: The market trades higher with a very small positive delta; next week, prices go down.
Current bubble/week 17 is not yet finished. Right now, it is trading lower, but with a smaller negative delta than last week. This may signal that sellers are losing strength and that a potential reversal will follow, with prices trading higher.
This is the same BTC 1H chart, but with price rejections from key liquidity areas acting as strong price barriers.
When prices reach a key area with strong liquidity and are rejected, it signals a good time to take action.
By observing price behavior at certain key price levels, we can improve our timing for entering or exiting the markets.
🔶 DETAILS
🔹 Bubbles Display
From the settings panel, traders can configure the bubbles with four main parameters: Mode, Timeframe, Size%, and Shape.
The image above shows five-minute BTC charts with execution over the last 3,500 bars, different display modes, a daily timeframe, 100% size, and shape one.
The Size % parameter controls the overall size of the bubbles, while the Shape parameter controls their vertical growth.
Since the chart has two scales, one for time and one for price, traders can use the Shape parameter to make the bubbles round.
The chart above shows the same bubbles with different size and shape parameters.
You can also customize data labels and timeframe separators from the settings panel.
🔶 SETTINGS
Execute on last X bars: Number of bars for indicator execution
🔹 Bubbles
Display Bubbles: Enable/Disable volume bubbles.
Bubble Mode: Select from the following options: total volume, buy and sell volume, or the delta between buy and sell volume.
Bubble Timeframe: Select the timeframe for which the bubbles will be displayed.
Bubble Size %: Select the size of the bubbles as a percentage.
Bubble Shape: Select the shape of the bubbles. The larger the number, the more vertical the bubbles will be stretched.
🔹 Labels
Display Labels: Enable/Disable data labels, select size and location.
🔹 Separators
Display Separators: Enable/Disable timeframe separators and select color.
🔹 Liquidity Heatmap
Display Heatmap: Enable/Disable liquidity heatmap.
Heatmap Rows: select number of rows to be displayed.
Cell Minimum Size: Select the minimum size for each cell in each row.
Colors.
🔹 Style
Buy & Sell Volume Colors.
Ultra Liquidity HeatmapThe Ultra Liquditiy Heatmap is a unique visualization tool designed to map out areas of high liquidity on the chart using a dynamic heatmap, helping traders identify significant price zones effectively.
Introduction
The Ultra Liquidity Heatmap is an advanced indicator for visualizing key liquidity areas on your chart. Whether you're a scalper, swing trader, or long-term investor, understanding liquidity dynamics can offer a powerful edge in market analysis. This tool provides a straightforward visual representation of these zones directly on your chart.
Detailed Description
The Ultra Liquidity Heatmap identifies high and low liquidity zones by dynamically marking price ranges with heatmap-like boxes.
.........
Dynamic Zone Creation
For low liquidity zones, the script draws boxes extending from the low to the high of the bar. If the price breaks below a previously defined zone, that box is removed.
Similarly, for high liquidity zones, the script tracks and highlights price ranges above the current high, removing boxes if the price exceeds the zone.
.....
Customizable Visuals
Users can adjust the transparency and color of the heatmap, tailoring the visualization to their preference.
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Real-Time Updates
The indicator constantly updates as new price data comes in, ensuring that the heatmap reflects the most current liquidity zones.
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Efficiency and Scalability
The script uses optimized arrays and a maximum box limit of 500 to ensure smooth performance even on higher timeframes or during high-volatility periods.
.........
The Ultra Liquidity Heatmap bridges the gap between raw price data and actionable market insight. Add it to your toolbox and elevate your trading strategy today!
Open Liquidity Heatmap [BigBeluga]Open Liquidity Heatmap is an indicator designed to display accumulated resting liquidity on the chart.
Unlike any other liquidity heatmap, this aims to accumulate liquidity at specific levels that build up over time, showing larger areas of liquidity.
🔶 FEATURES
The indicator includes the following settings:
Lookback : Used to determine the range calculation of the heatmap.
Leverage : Leverage of the liquidation (Counted as % in price, Example: 4.5 will return a distance from price of 4.5%, indicating any possible resting liquidity in this range).
Levels : Amount of levels to display (Each level is counted as liquidity resting on the chart; fewer levels will return a bigger area of liquidity sitting on the chart).
Mode : Apply a color gradient from the minimum liquidation to the maximum liquidity level. Set the maximum color gradient value (Counted as volume).
Offset : Automatically determine the offset range of the Volume Profiles. Manual offset of the Volume Profiles.
🔶 CALCULATION
for i = 0 to step - 1
float plotter = na
switch i
0 =>
plotter := hs
=>
plotter := hs - diff * ( i )
cls.hm.gnL(plotter)
cls.vp.put(plotter, 0)
We calculate levels like a normal volume profile with steps, from the highest point within the lookback to the lowest one. Each level will contain the corresponding amount of volume that the candle has closed in that range.
As we can see in the image above, we add liquidity each time the distance in % from price is between two levels.
Unlike many liquidity indicators that provide a single candle liquidity heatmap, this aims to add up liquidity (volume) in already present levels.
This can be extremely useful to see which levels are likely to be more liquid and tend to get a bigger reaction to the price.
Imagine it like a range of levels that each time price revisits that area, a new position area is added; we add volume in that area each time price visits that zone. Liquidity builds up in those zones, causing a bigger reaction to the price once the price visits it.
This indicator is not the same as a single candle heatmap like many others. What is a single candle heatmap?
A single candle heatmap is when a level is created on every new candle, coloring the level based on the total volume of it.
This indicator, on the contrary, aims to provide a more specific use by adding up liquidity each time price visits it.
🔶 BASIC DEMOSTRATION
This is a basic demonstration of how we can spot high liquidity points overall using confluence:
We see the POC of the liquidation in a low volume area of the normal volume profile adding up as confluence.
Resistance from the POC Volume Profile suggesting price will go lower.
Major long open liquidity down.
As we can see, price takes out all the long liquidity and right after pumping, indicating that all the major liquidity got taken out.
Some key note to take is that a POC in the liquidation heatmap in a low volume area of the normal Volume Profile add confluence of a possible big reaction in that zone.
In the forex market, we suggest to use a low distance from price (Leverage) while in a crypto market you can use the one that fit the best the current timeframe.
🔶 CONCLUSION
This indicator aims to show open resting liquidity that had built up over time, showing the most amount of liquidation in specific areas in an aggregated way unlike many liquidation heatmap indicators that show single-level liquidation.
🔶 RELATED SCRIPT
