Liquidation Reversal Signals

The logic revolves around Z-score normalization of up and down volume to locate statistical extremes. When up-volume z-scores exceed a threshold during a bearish Supertrend, it implies trapped shorts being squeezed; the opposite applies for long liquidations. The script tracks these liquidation spikes and monitors whether a Supertrend regime change follows soon after. If confirmed within the allowed timeout, a colored signal marks the event. In essence: • Z-score outliers = potential forced liquidations. • Supertrend = structural regime context. • Combined = statistically confirmed reversal signals, not random flips. This pairing reduces false positives by ensuring that both volatility structure and order-flow extremes agree before flagging a reversal.

• Setup: Add the script to your main chart. Choose a lower timeframe (default 15m) to capture more granular liquidation flows. Adjust Z-Score Length to control how far back the script measures normal behavior and Threshold to decide what counts as extreme. Keep Timeout Bars low (e.g. 20–50) for faster reversals, or higher for slower markets. • Read the chart:  • Circles appear below bars when long liquidations occur; above bars for short liquidations.  • A Supertrend flip with a recent liquidation spike will display an arrow and color shift.  • Fills between candles and trend lines show which side dominates: green for bullish reversal, red for bearish.  • Candle color fades based on the magnitude of liquidation pressure. • Settings that matter:  • Z-Score Length: Longer smooths noise but delays signal; shorter reacts faster.  • Z-Score Threshold: Higher means only extreme liquidations trigger; lower finds smaller squeezes.  • Timeout Bars: Defines how long after a liquidation the Supertrend flip remains valid.  • Lower Timeframe: Determines the precision of volume readings; too low may increase noise.