Draw on Liquidity [PhenLabs]

📊 Draw on Liquidity (DOL) Indicator
Version: PineScript™ v6

Description
The Draw on Liquidity (DOL) indicator is an advanced technical analysis tool designed to identify and visualize significant liquidity zones in the market. It combines volume analysis, pivot point detection, and real-time proximity alerts to help traders identify potential support and resistance levels where significant trading activity occurs. The indicator features dual display modes, adaptive volume thresholds, and a comprehensive real-time dashboard.

🔧 Components
• Liquidity Detection: Advanced pivot point analysis with volume validation
• Volume Analysis: Adaptive volume threshold system
• Display Modes: Historical and Current visualization options
• Proximity Detection: Real-time price-to-level distance monitoring
• Visual Dashboard: Dynamic status display with alert system

🚨 Important Dashboard Features 🚨
The dashboard provides real-time information about:
• High Draw Zones: Resistance levels with significant liquidity
• Low Draw Zones: Support levels with high trading activity
• Current Price: Real-time price monitoring
• Active Alerts: Proximity warnings when price approaches liquidity zones

📈 Visualization
• Historical Mode: Displays all past and present liquidity zones
• Current Mode: Shows only active, unhit liquidity levels
• Color-coded lines: Blue for high liquidity, Red for low liquidity
• Dynamic line extension: Updates with price movement
• Alert indicators: Visual signals when price approaches zones

Historical Visualization


Current Visualization


📌 Usage Guidelines
The indicator is highly customizable with several key parameters:

Pivot Settings:
• Shorter lengths (3-7): More frequent zones, suitable for scalping
• Longer lengths (7-15): Major zones, better for swing trading

Volume Analysis:
• Lower multiplier (1.5-2.0): More zones, higher sensitivity
• Higher multiplier (2.0-3.0): Major zones only, reduced noise

✅ Best Practices:
• Start with default settings and adjust based on timeframe
• Use Historical mode for analysis, Current mode for active trading
• Monitor dashboard alerts for potential trade setups
• Combine with trend analysis for better entry/exit points

⚠️ Limitations
• Requires sufficient volume data for accurate analysis
• Performance varies with market volatility
• Historical mode may become visually cluttered on longer timeframes
• Best performance during regular market hours

What Makes This Unique
• Dual Display System: Choose between historical analysis and current trading modes
• Volume-Validated Zones: Only marks levels with significant trading activity
• Real-time Proximity Alerts: Dynamic warnings when approaching liquidity zones
• Adaptive Threshold System: Automatically adjusts to market conditions
• Comprehensive Dashboard: All-in-one view of current market status

🔧 How It Works
The indicator processes market data through three main components:

1. Liquidity Detection (40% weight):
• Identifies pivot points using customizable lookback periods
• Validates levels with volume analysis
• Marks significant zones based on combined criteria

2. Volume Analysis (40% weight):
• Calculates dynamic volume thresholds
• Compares current volume to moving average
• Filters out low-volume noise

3. Proximity Analysis (20% weight):
• Monitors price distance to active zones
• Triggers alerts based on customizable thresholds
• Updates dashboard status in real-time

💡 Note: For optimal results, combine with price action analysis and consider using multiple timeframes for confirmation. The indicator performs best in markets with consistent volume and clear trend structure.