Candle Liquidity Algo [ValiantTrader]

Explanation of the "Candle Liquidity Algo" Indicator
This indicator is designed to help traders identify potential trading opportunities by analyzing liquidity zones and divergences between price action and these zones on higher timeframes.

Key Components:
1. Timeframe Settings
The indicator allows you to select a custom timeframe (like 'D' for daily, '60' for 60 minutes, etc.)

It then displays the first candle of each new period on this higher timeframe directly on your chart

2. Liquidity Zones
Creates smoothed high and low levels (using a simple moving average) from the higher timeframe

These act as potential support/resistance zones where liquidity may be concentrated

3. Divergence Detection
Looks for divergences between price action and the liquidity zones:

Bullish Divergence: When price makes a lower low but the liquidity zone low is higher

Bearish Divergence: When price makes a higher high but the liquidity zone high is lower

4. Visual Elements
Plots the first candle of each new higher timeframe period on your chart (colored green for up, red for down)

Draws labels when divergences are detected (green "Bullish Div" below price for bullish divergences, red "Bearish Div" above for bearish)

Draws temporary lines marking the relevant price levels where divergences occur

5. Alerts
The indicator can trigger alerts when divergences are detected, which can be useful for traders who want notifications about potential trading setups

How to Use in Trading:
Identify the Higher Timeframe Structure: The indicator shows you how the higher timeframe is developing while you're looking at a lower timeframe chart.

Watch for Divergences: When you see:

Price making lower lows but liquidity zones making higher lows → potential bullish reversal

Price making higher highs but liquidity zones making lower highs → potential bearish reversal

Use Liquidity Zones as Targets/Stops: The smoothed high/low levels can act as potential take-profit areas or stop-loss levels.

Combine with Other Confirmation: Like any indicator, it's best used with other confirmation signals (price action patterns, volume analysis, etc.)

The indicator is particularly useful for traders looking to align their trades with higher timeframe structure while operating on lower timeframes for entry precision.