Institutional Liquidity and Price Action Concepts [AlgoAlpha]🚀 Introducing the Institutional Liquidity and Price Action Concepts™ (ILPAC) , a comprehensive toolkit developed by AlgoAlpha as part of our Premium Collection. This All-in-One indicator offers a robust approach to understanding price action and liquidity, empowering traders with hyper customizable features to tailor their analysis to their specific trading strategies.
Designed with efficiency and compactness in mind, the script shows Price action and liquidity through four methods: Market Structure , Liquidity Heatmap , Trend Lines , and FOMO Bubbles . Additionally, the script also includes a fully customizable interface, to match each individual's trading style. By utilizing a blend of advanced algorithms and customizable parameters, Institutional Liquidity and Price Action Concepts™ (ILPAC) provides traders with a vast array of trading strategies ranging from high frequency scalping to timing better entries on long-term swing and investing positions.
The ILPAC ™ can be used with or without other AlgoAlpha Premium Collection indicators as this indicator has been designed to be able to act as a standalone toolkit.
Let's delve into the key features and functionalities of this versatile indicator:
🎯 Key Features (summary):
Market Structure Analysis :
Customizable time-horizon
BOS confirmation methods
Adjustable CHoCH/BOS line styles
Swing point highlighting
Color customization
Liquidity Heatmap:
Configurable look-back period
Adjustable resolution
Customizable scale colors
Trend Lines :
Look-back period settings
Noise filter factor
Trend line signals with color options
FOMO Bubbles :
Configurable look-back period
Adjustable noise filter factor
Customizable bubble colors
🎯 Key Features (in-depth):
The Market Structure component within ILPAC ™ shows the underlying trend of the market using swing high and lows and is purely price action based. Higher Highs(HH), Higher Lows(HL) labels generally indicate an uptrend and Lower Highs(LH) and Lower Lows(LL) indicate a downtrend. The trend of the market is also determined by Change of Characters (CHoCH) and Break of Structure patterns (BOS). The Market Structure component marks out all these automatically and colours the bars on your chart for easy visualisation of trend.
The Liquidity Heatmap component within ILPAC ™ visualizes areas of high and low liquidity in the market. It identifies zones where liquidity is concentrated not only at specific price levels but also over time, giving the user a 3 Dimensional view of liquidity. The heatmap colours represent different levels of liquidity, making it easy to see where large volumes of orders may exist. This component helps traders understand the liquidity landscape and make informed decisions based on potential support and resistance levels.
The Trend Lines component within ILPAC ™ automatically draws trend lines based on historical price data. It identifies significant highs and lows, connecting them to form trend lines that highlight the overall market direction as well as give breakout signals as shown in the image below. The component also includes a noise filter to reduce false signals and ensure only valid trend breakouts are displayed. Customizable colour settings allow traders to personalize the visual representation of trend lines on their charts.
The FOMO Bubbles component within ILPAC ™ identifies periods of market activity driven by Fear of Missing Out (FOMO). By analysing price action and volume, it highlights bubbles where traders are likely entering positions impulsively. These bubbles are displayed on the chart with customizable colours, providing a visual cue for potential overbought or oversold conditions. This component helps traders recognize and potentially capitalize on market exuberance or panic.
🎯Usage Examples:
At its core, the components within ILPAC ™ were designed to operate with each other as a form of confluence and robust analysis. Typically, Price action components such as the Market Structure and Trend Lines can be used for entries while the Liquidity components like FOMO Bubbles and the Heatmap can be used to find exit points. Here are some examples of how they can be used.
Trend Trading
Using the Market Structure component, enter a trade during a CHoCH and set TP at key areas of liquidity using the heatmap. Users can also choose to enter into a BOS which is an indication of a trend continuation.
Reversal Trading
Using the Liquidity Heatmap to find areas of liquidity for possible reversals, wait for a rejection from a liquidity zone and use the Trend Line Breakout signals as confluence for an entry. Exits can be set at liquidity zones or using FOMO Bubbles as take profit signals.
(These are just examples for reference, the ILPAC ™ offers significantly more possibilities for customisation and fine tuning of your trading strategy.)
🎯Conclusion:
The Institutional Liquidity and Price Action Concepts™ (ILPAC) indicator by AlgoAlpha is a powerful tool for traders, offering in-depth market insights through its Market Structure, Liquidity Heatmap, Trend Lines, and FOMO Bubbles components. By integrating Price Action based analysis with Liquidity analysis, ILPAC ™ boasts a superior design for the confluence between its components, using Price Action components for entry opportunities and Liquidity based components for exit opportunities. With its highly customizable settings, this indicator caters to all trading styles, from scalping to long-term investing. By providing clear visualizations and automatic trend and liquidity detection, ILPAC ™ empowers traders to make informed decisions, enhancing their trading strategies and improving overall market understanding.
Liquidityheatmap
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
Crypto Liquidation HeatmapThis indicator is designed to identify potential areas of liquidations, in most crypto assets.
How does it work?
At the core of this indicator, it utilizes Open Interest (a statistic measuring the sum of all open futures positions), which I will refer to as OI.
The script monitors changes in OI, and then correlates these changes to the price action trend to derive an estimation of whether an increase in OI relates to an increase in Shorts or in Longs.
The trend is currently identified by the candle closing direction, therefore a bullish candle with increasing OI, results in the script counting an increase in Long Positions. Whereas a bearish candle and increasing OI, results in an increase of Short Positions.
Following that, the script estimates where these new positions will be liquidated (set either as a manual percentage, or using one of the defined presets).
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What makes this indicator unique from "Liquidation Levels" scripts, is the the way it groups potential liquidation volumes in segments, creating a cumulative view of liquidity potential - a true heatmap, not simply levels. To further clarify, liquidity within a set range is added to the segment of that range. The settings allow you to set the resolution of the range, according to preference. There is also an Automatic mode (at this moment limited to Bitcoin).
Regular OI Liquidation levels do not combine their volumes when overlapped, nor do they adhere to any ranges - making them scattered and not representative of the true liquidity in that area. This Liquidation Heatmap fixes all of those limitations.
Another unique addition to this Liquidation Heatmap, is my custom three tier color gradients with alpha support (transparency). This function allows a seamless transition of the coloring in liquidation potential from purple (minimum), to blue (medium), to yellow (maximum). This allows a larger range of liquidity identification, along with further aesthetic bonuses.
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How to use this indicator?
In general, such a tool can be used in numerous ways. It is not a standalone signal, meaning you should always compliment this tool with your own TA and reasoning.
One way of using this tool, is to anticipate that the price will continue on its trend, when you see it moving towards a zone of high liquidity (expecting that liquidity to be taken out).
Another way of using this tool, would be to anticipate a kickback after a liquidation event has taken place, thus returning to the mean.
