Liquidity Pools from Repeated Wick Rejections and Trapped Volume
Summary
The indicator identifies candidate liquidity zones from repeated wick tests that fail to close through a candle-body reference level. It maintains separate upside and downside references, counts contacts only when tests are sufficiently spaced, and confirms a zone after price has moved away for a configurable wait. For each zone, it accumulates an estimate of trapped volume based on the share of each bar’s volume associated with trading beyond the level. Zones remain active until price closes through their far extreme for consecutive bars, which the description treats as a sweep.
The source presents live pools as possible price destinations and suggests using sweeps for reversal setups, heavy pools for target selection, and pool locations when considering stops. It also explains that stricter contact settings yield fewer zones. These are indicator interpretations and proposed applications, not validated trading results: no backtest, market sample, or evidence that trapped volume measures actual resting orders is provided. The accompanying implementation includes platform-specific details and configuration limits.
Key ideas
- The indicator builds candidate zones from repeated wick rejections at stable body levels.
- It spaces contact counts and delays confirmation until price has moved away from the last test.
- Its trapped-volume label estimates volume traded beyond the reference level during rejected tests.
- A zone is removed after price closes through its far extreme for consecutive bars.
- The suggested uses include sweep entries, target selection, and awareness of likely stop clusters.
- The source offers no backtest validating the indicator’s signals or volume proxy.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.