Liquidity & inducements

Hi all!

This indicator will show liquidity and inducements.

I will continue to try to add different types of liquidity and inducements, at this moment it contains 6 kinds of liquidity/inducement, they are:

• Grabs
• Big grabs
• Sweeps
• Turtle soups
• Equal highs/lows (liquidity and inducement)
• BSL & SSL

And 1 type of inducement:

• Retracement

This description will contain indicator examples of each individual liquidity and inducement. They will all be with the default settings.

Settings

First you will find settings for the market structure (BOS/CHoCH/CHoCH+). Select left and right pivot lengths and if the pivots should have a label or not.

This is the base foundation of this indicator and is possible with my library 'PriceAction' (tradingview.com/script/nAGqSrxy-PriceAction/).

You will see solid lines for break of structures (BOS), change of characters (CHoCH) and change of character plus (CHoCH+).

The pivots found will be the core of this indicator and will show you when the closing price breaks it. When that happens a break of structure (BOS) or a change of character (CHoCH or CHoCH+) will be created. The latest 5 pivots found within the current trend will be kept to take action on.

A break of structure is removed if an earlier pivot within the same trend is broken and the pivot's high price for a bullish trend or low price for a bearish trend is more extreme than the BOS pivot's price.

You are able to show the pivots that are used. "HH" (higher high), "HL" (higher low), "LH" (lower high), "LL" (lower low) and "H"/"L" (for pivots (high/low) when the trend has changed) are the labels used.

In the next section ('Liquidity ($$$)') you can select which types of liquidity you want to see. Note that 'Equal highs/lows' can also show inducement (more on that later).

In the section afterwards ('Inducement (IDM)') you can select if you want retracement inducements to be visible or not. More information on what they are later on.

The section for each individual liquidity and/or inducement can first contain a line named 'Pivot', where you can set the pivot lengths (first left, then right). Then you can set the 'Lookback', which means that the 'Lookback' number of past pivots is to take action on. After that you set the 'Timeframe' for the pivots used. That means that all available liquidity/inducements will be from your desired timeframe. Lastly you set the color of the liquidity/inducement (either a single color or bullish followed by bearish colors).

Lastly in the settings you can select the font sizes for the market structure and liquidity/inducements and what style liquidity/inducements lines will have. The sizes defaults to 7 and has a dotted line look.

Grabs

Liquidity grabs and liquidity sweeps are very similar. It all depends on if the current bar closed above/below the liquidity pivot and on if its a continuation or reversal. In a liquidity grab the bar that's above or below the liquidity pivot was not closed above or below it. Like this:



Or



The visual feedback will be a dotted line between the liquidity pivot and liquidity grab bar and a linefill between the high of the liquidity grab bar and the liquidity pivot.

Indicator example:



Big grabs

This is another 'grabs' option. You can show an additional grab if you want to. I suggest having this grab from a higher timeframe or with larger pivot lengths than the other grab.

The default is with the chart timeframe and 10/10 as pivot lengths.

Indicator example:



Sweeps

A liquidity sweep is like a liquidity grab but with the difference that price closes above/below and has a continuation instead of a reversal. If the liquidity pivot was at the same bar as a BOS/CHoCH/CHoCH+ it will not be a liquidity grab but a structural break instead.

They can look like this:



Indicator example;



Turtle soups

If only one candle is beyond the pivot it could be a liquidity grab. It's a grab if price didn't close beyond the liquidity pivot, if so it's invaliditet. Turtle soups are basically false breakouts that takes liquidity (is a false breakout from a pivot with the lengths and timeframe from the settings).

The turtle soup can have a confirmation in the terms of a change of character (CHoCH). You can enable this in the settings section for 'Turtle soups' through the 'Confirmation' checkbox (enabled by default). The turtle soup strategy usually comes with some sort of confirmation, in this case a CHoCH, but it can also be a market structure shift (MSS) or a change in state of delivery (CISD).

The addition of turtle soups is possible through my script 'Turtle soup' (tradingview.com/script/AmpHKmaz-Turtle-soup/).

The drawing will be a dotted line between the liquidity pivot and the last bar of the false breakout and a box from the start of the false breakout to the end of it.

Indicator example:



Equal highs/lows

Equal highs/lows will always show liquidity, but might also show inducement. Inducement will be shown on equal lows if the trend is bullish and on equal highs if it's bearish, like this:



Or



Equal highs can only be created if the second pivot is lower than the first one. Equal lows can only be created if the second pivot is higher than the first one. If that is not the case it could be a liquidity grab.

When equal highs or equal lows are find that produces inducement (equal lows in a bullish trend and equal highs in a bearish trend), the indicator will first display inducement and will show liquidity once traders are induced to enter the security. Stop loss placement, for liquidity, is 0.1 * the average true range (ATR, of length 14). They will look like this:

Only inducement:



Inducement and liquidity:



Indicator example:



Equal highs/lows inducements can not be triggered after a BOS/CHoCH/CHoCH+. They are cleared upon a structural break.

BSL & SSL

Buyside liquidity (BSL) and sellside liquidity (SSL) will be shown. A pivot that's been mitigated (touched by price) can never be BSL or SSL. The BSL/SSL available will be dynamic while price moves (work in Replay and lower timeframes that moves fast) and pick the latest pivot/s (with left and right lengths from the 'Market structure' section). You can define how many BSL/SSL you want to see with a default value of 1, meaning only 1 BSL and 1 SSL can be shown. If there is no unmitigated high (BSL) or low (SSL), no BSL/SSL will be available to show. If there are BSL/SSL available they're very useful to use as targets for entering a trade.

The will look like this when available;



And without BSL available:



Or



And without SSL available:



Note that the examples without BSL/SSL available could have liquidity available from previous price legs.

This can be an example of a BSL/SSL sequence:

First both buyside and sellside liquidity is available:



Then a new low appears and new sellside liquidity is available:



Then buyside liquidity is mitigated, so only sellside liquidity is available:



A new high pivot appears and buyside liquidity is available again:



Lastly a bearish CHoCH happens and sellside liquidity is mitigated, only buyside liquidity is available:



Retracement

The first retracement after a BOS/CHoCH/CHoCH+ is considered an inducement with the mission to get traders into a trade prematurely to get stopped out. This level is shown and look like this:



Or



A retracement inducement is removed when a new BOS/CHoCH/CHoCH+ appears and it's not triggered.

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As of now there aren't any alerts available. You cannot use the Pine Screener from Tradingview either to see new liquidity/inducement events. I have this planned for future updates though.

I hope that this long description makes sense, let me know otherwise! Also let me know if you experience any bugs or have a feature request or just want to share good settings to use.

Best of trading luck!