[GrandAlgo] Liquidity Heatmap

l’altro ieri

The Liquidity Heatmap is a unique indicator designed to identify and highlight zones where price is likely to react based on liquidity dynamics. Unlike tools that analyze volume across all price levels, this indicator focuses specifically on liquidity concentrated around potential reversal zones. By evaluating price action and volume at these critical levels, it identifies areas of heightened interest for traders.

Key Features:
Dynamic Liquidity Zones:
Automatically calculates liquidity zones based on historical price activity, ensuring real-time relevance.

Volume-Based or Candle Interaction Analysis:
Choose between volume-based evaluation to focus on order flow or candle-based interaction for a broader perspective.

Customizable Percentile Threshold:
Filter zones based on their significance by setting a threshold to display only the top liquidity areas.

Lookback Period Control:
Define how many candles the indicator should analyze, allowing you to focus on short-term or long-term liquidity levels.

Color-Coded Visuals:
Liquidity zones are displayed using gradients, with green representing potential bullish zones (below price) and red representing potential bearish zones (above price). Stronger zones are indicated with darker colors.

How It Works:
The Liquidity Heatmap divides the price range into multiple levels, evaluating each level for interaction with historical price data. Liquidity zones are calculated based on:

• Volume Concentration: When enabled, the indicator evaluates zones using historical volume, highlighting areas with significant order flow.
  
• Candle Interactions: When volume-based analysis is disabled, the indicator calculates the number of candles interacting with each zone to determine its importance.
  

Zones that meet the user-defined percentile threshold are highlighted on the chart. Color gradients indicate the strength of each zone, allowing traders to prioritize the most significant areas. Real-time alerts notify users when the price touches these zones, providing actionable insights.

The image illustrates the volume-based analysis feature of the Liquidity Heatmap indicator. Liquidity zones are dynamically highlighted with intuitive color gradients—green for bullish volume and red for bearish volume—providing a clear visual representation of areas with concentrated liquidity at potential reversal points. This feature helps traders focus on zones with significant market activity, enhancing their decision-making process.



Disclaimer
This indicator is a technical analysis tool designed to assist traders by providing insights into market conditions. It does not guarantee future price movements or trading outcomes and should not be relied upon as a sole decision-making tool. The effectiveness of this indicator depends on its application, which requires your trading knowledge, experience, and judgment.

Trading involves significant financial risk, including the potential loss of capital. Past performance of any tool or indicator does not guarantee future results. This script is intended for educational and informational purposes only and does not constitute financial or investment advice. Users are strongly encouraged to perform their own analysis and consult with a qualified financial professional before making trading decisions.