HVN Smart Liquidity

📊 What the Indicator Does

HVN Smart Liquidity is a professional tool for identifying institutional liquidity zones based on Market Profile analysis and High Volume Nodes (HVN). The indicator visualizes dynamic zones where the greatest trading activity is concentrated, using TPO (Time Price Opportunity) methodology to reveal levels where major market participants place their positions.

🎯 Originality and Advantages

Unlike standard volume indicators or static support/resistance levels, HVN Smart Liquidity offers a unique combination of features:

Multi-timeframe analysis: simultaneous calculation of HVN zones across 4 different timeframes with automatic adaptation to the current chart
Dynamic zone behavior: boxes automatically contract when price moves inside the zone and are deleted upon complete breakout, reflecting real institutional liquidity dynamics
Precise TPO calculation: instead of simple volume counting, uses Market Profile methodology with range division into 20 price channels
Intelligent filtering: adjustable HVN threshold (default 70% of maximum TPO) filters out insignificant zones and shows only critically important levels
⚙️ How the Indicator Works
1. Market Profile Data Collection

The indicator tracks bar formation on selected timeframes. For each completed period:

High-Low range is recorded
Number of bars on current chart timeframe is counted
Range is divided into 20 equal price channels
2. TPO (Time Price Opportunity) Calculation

For each of the 20 channels, the indicator counts how many bars touched that price range. This provides distribution of trading activity by price — the foundation of Market Profile methodology. The get_tpo() function checks the intersection of each bar's Low-High range with channel boundaries.

3. HVN Zone Identification

The algorithm identifies High Volume Nodes — areas where TPO exceeds the specified threshold (default 70% of maximum value). Adjacent channels exceeding the threshold are merged into a single liquidity zone. This creates visual boxes showing where price spent maximum time and where large positions are concentrated.

4. Dynamic Zone Management

After creation, HVN zones begin their own lifecycle:

Contraction on touch: when price enters the zone, the box contracts from the side nearest to current price, showing partial liquidity absorption
Deletion on breakout: if price breaks through upper or lower boundary, or passes through the zone in one bar, the box is completely deleted — liquidity is exhausted
Current TF projection: zones extend right (extend.right), showing level relevance
🔧 How to Use
Basic Setup:
Timeframe selection: enable desired timeframes (TF1-TF4) via checkboxes. Recommended to use 2-3 timeframes for different trading styles
Auto mode: when selecting 'Auto', the indicator automatically chooses higher timeframe depending on current chart (e.g., on M5 → selects H2, on H1 → selects D)
Color differentiation: configure different colors for each timeframe to distinguish short-term and long-term liquidity zones
Trading Strategies:
Strategy 1: HVN Bounce
Look for entry points when price approaches an HVN zone from a higher timeframe. If the zone begins to contract (price inside) but isn't broken — high probability of bounce. Use lower timeframe zones for precise entry timing.
Strategy 2: Breakout and Retest
After complete HVN zone breakout (box disappeared), wait for price to return to the level of the former zone. Boundaries of deleted zones often become strong support/resistance levels for retests.
Strategy 3: Timeframe Confluence
The strongest signals occur when HVN zones from different timeframes coincide or are close to each other. This shows consistency of institutional levels across different time scales.
Parameter Optimization:
HVN Threshold (70%): increasing to 80-90% gives fewer but more significant zones; decreasing to 50-60% shows more potential levels
Show Old Boxes: disable for clean chart (only last 50 zones shown), enable for historical analysis
Border Width: increase border width for better visibility on busy charts
💡 Smart Money Concept

The indicator is based on understanding that institutional participants (Smart Money) leave traces of their activity in volume distribution across price levels. High Volume Nodes represent zones where:

Market makers place limit orders to provide liquidity
Institutional traders accumulate or distribute large positions
Fair Value prices form after volatile movements

By tracking the dynamics of these zones, traders can "see" the intentions of major players and trade alongside institutional flow.

📈 Applicability

The indicator is universal and works on all market types:

Cryptocurrency: Bitcoin, Ethereum, altcoins
Forex: major and cross pairs
Stocks: equities, indices
Futures: commodity and financial futures

Timeframes: from M1 to Monthly. Optimal results on M5-H4 for intraday and H4-D for swing trading.

⚠️ Important Notes
The indicator requires history accumulation — give it time on first bars of new periods
On low-liquidity instruments or exotic pairs, HVN zone quality may be lower
Use the indicator in combination with other analysis methods (price action, support/resistance, trends)
Maximum box count limited to 500 — during extended operation, old zones are automatically deleted
🔬 Technical Details
Pine Script version: v5
Type: overlay indicator
Computational complexity: medium (uses loops for TPO calculations)
Repainting: minimal, only when new zones form on higher TF
📚 Recommended Reading

For deep understanding of concepts underlying the indicator:

J. Peter Steidlmayer — "Markets and Market Logic" (Market Profile fundamentals)
James Dalton — "Mind Over Markets" (TPO and Value Area)
Smart Money Concepts (SMC) and institutional trading methodologies