Key Factors That Determine HOB Relevance

Interaction with Fair Value Gaps (FVGs)

HOBs that interact with Fair Value Gaps (FVGs) are generally more significant because they indicate areas where liquidity is most likely trapped. The indicator differentiates between:

• Full-Body HOBs: Where the entire candle body is inside the FVG. These are considered high-confidence liquidity zones.
• Partial HOBs: Where only the equilibrium level of the order block is within the FVG. These are weaker but still relevant liquidity areas.
• Larger FVGs typically indicate greater liquidity, making the associated HOBs more relevant.

Higher Timeframe (HTF) Confirmation

HOBs that appear on multiple timeframes, especially higher timeframes (HTFs) like 4H or 1D, carry more weight. If an HOB aligns with liquidity zones on HTFs, it is more likely to act as a key reaction level. The indicator prioritizes HOBs that match with strong HTF order blocks, making them more reliable levels for trading decisions.

Clustering and Liquidity Confluence

When multiple HOBs and Breaker Blocks (BBs) are stacked in the same price region, they form liquidity clusters. The denser these clusters, the stronger the level becomes. The indicator recognizes these high-confluence areas, as they often serve as major points of interest for institutional trading activity. HOBs found near swing points or liquidity grabsare especially relevant.

Mitigation and Order Flow Analysis

Once an HOB has been interacted with (“mitigated”), its relevance can change:

• Untouched HOBs are highly relevant as they likely contain unfilled institutional orders.
• Mitigated HOBs (those that have been touched by price) become less relevant, as liquidity in that area may have been absorbed.
• If a mitigated HOB triggers an immediate strong price reaction, it may still contain remaining liquidity, keeping it relevant.
• In some cases, a mitigated HOB can transition into a Breaker Block (BB) if the price structure shifts accordingly.

How to Use This Information in Trading?

• Prioritize HOBs that align with HTF liquidity zones – these are the strongest.
• Look for HOBs that interact with large Fair Value Gaps (FVGs) – they indicate high liquidity.
• Check for clusters of HOBs and BBs – the more confluence, the better.
• Watch for mitigation reactions – if a mitigated HOB still shows a strong response, it may still hold liquidity.

By applying these principles, the Hidden Liquidity Indicator ensures that only the most relevant HOBs are displayed, allowing traders to focus on high-probability liquidity zones.