Estimating Liquidity Zones from Volume Spikes and Leverage
Summary
The article describes an MQL5 heatmap that estimates potential liquidation zones from OHLC and volume data. It marks candles whose volume exceeds a moving average, uses candle direction to choose a level below or above the candle, and applies a user-defined leverage assumption to estimate its distance. A rolling buffer ranks qualified signals by relative strength, which is reflected in line styling and bubble markers. Untouched levels extend forward until price sweeps them, and configurable object limits help manage chart clutter.
The method is intended as an analytical aid for spotting possible liquidity concentrations or sweep areas. Its evidence consists of a reproducible indicator design, not validation against exchange liquidation records or trading performance. The author emphasizes that the levels are estimates: high volume can arise for other reasons, and the simplified leverage calculation omits exchange margin rules and individual position details. Results should therefore be treated as potential confluence with market structure rather than confirmed liquidation data.
Key ideas
- The indicator uses volume above its moving average as a proxy for notable market activity.
- Bullish and bearish signal candles generate estimated levels below and above their respective price ranges.
- A rolling buffer ranks signal strength and controls the visual prominence of levels and bubbles.
- Active levels extend until price sweeps them, after which they remain fixed on the chart.
- The indicator estimates potential liquidity areas and does not identify actual exchange liquidations.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.