Liquidity Trap: Fakeout & POI

Liquidity Trap: Fakeout & POI

Indicator designed for mean reversion within accumulation and consolidation phases. It provides high-probability entry signals by identifying when the market creates liquidity traps and returns to the true Point of Interest (POI).

💡 Key Features & Trading Logic:

• ⚡ Signals (L for Long, S for Short) are confirmed only after the candle closes, ensuring historical signals match real-time performance.
  
• 🎯 Liquidity Traps (Fakeout Reversal): The core logic waits for price to break above the established range high or below the range low (hunting liquidity) and only triggers an entry signal once the price re-enters the channel.
  
• ⚖️ Volume-Weighted POI: The central yellow line is a dynamic VWAP-based Point of Interest. This is the mathematical fair value zone where the most volume has occurred, acting as a strong magnet for price and an ideal take-profit level.
  
• ⚙️ Smart Filters: Employs linear regression slope and volume validation to ensure signals only fire in genuinely ranging markets.
  

How to Trade It:

1. Identify the Box: Wait for the script to draw the grey accumulation zone.
   
2. Wait for the Trap: Price moves into the pink (sell zone) or teal (buy zone) area and sweeps the extremes.
   
3. Enter on the Return: An L (Long) or S (Short) label signals a confirmed entry back into the value area. The yellow POI line is your primary target.
   

📈 Pro-Tip:

This indicator is designed for non-trending market conditions. It is most effective on instruments that tend to oscillate or spend significant time in consolidation. While it works across all timeframes, lower timeframes can offer frequent opportunities for scalping liquidity traps, provided there is enough volume to validate the moves.