ID009 Liquidity Path [ReconHK]

Liquidity Path is an overlay indicator. It is not a strategy. The script uses: * indicator(..., overlay = true) * plot() for the Liquidity Pivot / POC line * plot() for optional EMA 20 and EMA 50 lines * bgcolor() for optional bias background * box.new() for the right-side liquidity profile * box.new() for the lookback zone * label.new() for the pivot label * alertcondition() for signal and pivot events The script does not use: * strategy.entry() * strategy.exit() * strategy.close() * automatic order placement * automatic risk management The originality of the script is in how it combines several liquidity concepts into one path framework. The main components are: 1. Structural liquidity filter 2. Continuity check 3. Profile-based Liquidity Pivot 4. Smoothed activity profile 5. Value area calculation 6. Trend context using EMA 20 and EMA 50 7. Relative volume confirmation 8. Buyer-pressure confirmation 9. POC reclaim or retest logic 10. Extension control 11. Path-mode strictness 12. Cooldown control 13. Visual profile and pivot tools 14. Alerts for reclaim, loss, and path signal These components are not just displayed separately. They work together to answer one practical question: Is price reclaiming or holding above an important liquidity area with enough structure, volume, trend context, and buyer pressure? This is what makes the script different from a basic moving-average, volume, or profile-only display.

The script first checks whether the symbol has acceptable structural liquidity. This helps reduce signals on thin, fragmented, or unreliable markets. The structural liquidity data is calculated from daily data: dClose dOpen dHigh dLow dVol The script calculates daily dollar volume: addvD = daily close * daily volume Then it calculates: addv20 = 20-period average daily dollar volume p10Addv20 = 10th percentile of daily dollar volume over the short liquidity window This means the script does not only check average liquidity. It also checks whether the lower-end liquidity is acceptable. A symbol can have one large-volume day and still be unreliable if many other days are weak. The script also checks gap behavior: gapPct = absolute difference between current daily open and prior daily close gapHit = gap is counted when it is greater than the internal gap threshold gapFreqPct = percentage of recent days with meaningful gaps This helps identify symbols that move with frequent gaps instead of continuous trading behavior. The continuity check uses the selected continuity timeframe: contTfInput = 30, 60, 120, or 240 minutes It checks whether volume is missing or zero on that secondary timeframe: deadBar = continuity timeframe volume equals zero deadBarPct = percentage of dead bars in the recent window The script also checks stability: cvAddv = coefficient of variation of daily dollar volume rangeFrac = daily range divided by daily close medRangeFrac = median range fraction The Liquidity quality setting changes thresholds: Strict requires higher average dollar volume, stronger lower-percentile dollar volume, fewer dead bars, fewer gaps, lower dollar-volume variation, and lower median range fraction. Balanced uses medium thresholds and is intended for most liquid stocks and crypto. Loose allows weaker structure and can produce more signals, but may also accept less reliable symbols. The script creates: structAddvOk structP10Ok structDeadOk structGapOk structCvOk structRangeOk The main path setup uses: structuralQualified = structAddvOk and structP10Ok and structDeadOk The script also calculates: structuralRobust = structuralQualified and structGapOk and structCvOk and structRangeOk This gives the script a liquidity-quality foundation before it evaluates the profile path signal.

The script builds a custom right-side liquidity profile from the selected lookback period. The profile range is: highs = highest high over the lookback lows = lowest low over the lookback priceRange = highs - lows The profile is divided into a fixed number of bins: BINS_COUNT = 120 Each bar in the lookback contributes activity to one price bin using hlc3: p = hlc3 The script adds volume to the selected bin: v = volume * weight The weighting is enabled internally: weightedInput = true This means newer bars receive more weight than older bars: w = 1.0 - i / lookbackInput This creates a profile that still uses the full lookback but gives more importance to recent activity. After raw bin activity is built, the script smooths the profile. It loops around each bin and averages nearby bins with distance-based weights. This reduces noise and avoids making the pivot depend too heavily on one single sharp bin. The script finds the strongest smoothed bin: maxVol = highest smoothed bin activity pocIdx = index of strongest bin pocRaw = price at the center of that bin This raw pivot is then smoothed: pocSmoothed = EMA of pocRaw The final Liquidity Pivot is clamped inside the calculated value area: pocPrice = clamp(pocSmoothed, value area low, value area high) The value area is calculated from the POC outward: 1. Start at the POC bin. 2. Add the neighboring bin with more activity. 3. Continue expanding up or down until the selected value-area percentage is reached. The script calculates: vah = value area high val = value area low The plotted Liquidity Pivot is the final smoothed and clamped POC: plot(pocPrice, title = "Liquidity Pivot / POC") This profile design is useful because the pivot is not just the highest raw volume bin. It is smoothed, recent-weighted, and constrained by the internal value area.

The Liquidity Path signal is built from several gates. First, the script checks where price is relative to the Liquidity Pivot: abovePocNow = close > pocPrice belowPocNow = close < pocPrice Then it measures distance from the pivot: pocDistancePct = distance between close and pocPrice in percent This is important because the script tries to avoid late entries. A price that is far above the pivot may already be extended. The script also measures distance from the fast EMA: emaDistancePct = distance between close and EMA 20 in percent The path mode changes strictness: Early allows more signals and a wider reclaim window. Balanced uses medium behavior. Strict requires tighter confirmation. The script detects: crossClosePoc = close crosses above the Liquidity Pivot crossUnderPoc = close crosses below the Liquidity Pivot It also detects recent reclaim behavior: barsSinceReclaim recentReclaim The reclaim window changes by path mode: Strict = shorter window Balanced = medium window Early = longer window The script also allows a recent retest: recentPocRetest A retest means price recently touched near the Liquidity Pivot but closed back above it. This supports the idea that the pivot may be acting as an accepted liquidity reference. The POC break-quality check requires: * price above the pivot * close meaningfully above the pivot * high above the pivot The POC slope check changes by mode: Strict requires the pivot to be rising recently. Balanced allows the pivot to be stable or rising over a short comparison. Early allows a more flexible pivot condition. The extension filters are: nearPocPath = price is above POC but not too far above it notExtendedPath = price is not too far from EMA 20 The trend filter checks: * EMA 20 above EMA 50 * close above EMA 20 * EMA 20 not falling This filter can be disabled by the user. The volume confirmation checks: * relative volume is not na * relative volume is above the user threshold * current volume is above volume moving average The buyer-pressure confirmation checks: * bullish candle * close location value is above the bullish threshold * delta is improving, or recent buy-share estimate is strong, or price closed above the prior high The final setup requires: liquidityPathSetup = structuralQualified and price above POC and POC break quality and price near POC and price not extended and recent reclaim, recent retest, or current reclaim The final raw path signal requires: liquidityPathSetup and trendPathOk and volumePathOk and pressurePathOk and path-mode slope condition The final signal also uses a cooldown: pathCooldownBars depends on Early, Balanced, or Strict mode pathSignal = pathSignalRaw and pathCooldownOk This makes the signal more selective than a simple POC cross. It must pass liquidity quality, pivot location, extension control, trend context, participation, buyer pressure, and cooldown logic.

The script includes user inputs grouped into four sections. Core inputs: 1. Liquidity quality Controls the structural liquidity filter. Strict = cleaner but fewer symbols and signals. Balanced = recommended default. Loose = more permissive. 2. Continuity timeframe Secondary timeframe used to check whether trading activity is continuous or fragmented. 3. Use trend filter When enabled, path signals prefer EMA 20 above EMA 50, close above EMA 20, and non-falling EMA 20. Liquidity Profile inputs: 4. Profile lookback Number of bars used to build the blue profile and calculate the Liquidity Pivot. 5. Value area % Percent of profile activity used to define the value area. 6. Show blue liquidity profile Displays the right-side profile. 7. Show pivot label Displays the right-side label for the Liquidity Pivot. 8. Show lookback zone Highlights the exact chart area used to build the profile. Liquidity Path inputs: 9. Path signal mode Early, Balanced, or Strict. 10. Max distance above POC % Prevents late signals when price is already too far above the pivot. 11. Min RVOL confirmation Minimum relative volume required for participation confirmation. Visual inputs: 12. Show EMA lines Displays EMA 20 and EMA 50. 13. Show PATH labels This input exists in the current script, but the uploaded version does not show a plotted path label command. If a visible label is intended, a plotshape() or label.new() condition should be added for pathSignal. 14. Show subtle bias background Optional green or red background based on price above or below the Liquidity Pivot. 15. Pivot name Custom name shown beside the pivot label. Visual drawing: The right-side profile is drawn using boxes. Each box represents one price bin. Wider boxes mean more normalized activity at that price area. The lookback zone is drawn with a box covering: * selected lookback bars * highest high and lowest low of that lookback The pivot label is drawn on the right side at the current Liquidity Pivot price. Alerts: The script includes three alert conditions: 1. Liquidity Path Signal Triggered when price reclaimed or held above the POC with liquidity, volume, and buyer-pressure confirmation. 2. POC Reclaim Triggered when price crosses above the Liquidity Pivot. 3. POC Lost Triggered when price crosses below the Liquidity Pivot. Important distinction: * POC Reclaim is a simple pivot-cross event. * POC Lost is a simple pivot-loss event. * Liquidity Path Signal is more selective because it requires structural liquidity, pivot position, extension control, trend context, relative volume, buyer pressure, and cooldown logic. Publication note: This description explains how the combined parts work together so users do not need to read Pine code to understand the tool. It also clarifies that the script is a liquidity and participation review indicator, not an automated trading strategy.