Smart Money Footprint & Cost Basis Engine [AlgoPoint] - Read the Market Like a Pro

This indicator is not just another signal generator; it's a comprehensive market analysis tool designed to identify the "footprints" of Smart Money (institutions, whales) and pinpoint high-probability reaction zones. Instead of relying on lagging averages, this engine analyzes the very structure of the market to find where large players have shown their hand.

How It Works: The Core Logic

The indicator operates on a multi-stage confirmation process to identify and validate Smart Money zones:

1. Smart Money Detection (The Trigger): The engine first scans the chart for signs of intense, urgent buying or selling. It does this by identifying Fair Value Gaps (FVGs) created by large, high-volume Displacement Candles. This is our initial Point of Interest (POI).

2. Cost Basis Calculation (The Average Price): Once a potential Smart Money move is detected, the indicator calculates the Volume-Weighted Average Price (VWAP) for that specific move. This gives us a highly accurate estimate of the average price at which the large players entered their positions.

3. Historical Confirmation (The "Memory"): This is the indicator's most unique feature. It checks its historical database to see if a similar Smart Money move (in the same direction) has occurred in the same price area in the past. If a match is found, the zone's significance is confirmed.

4. Verified Cost Basis Zone (The Final Output): A zone that passes all the above checks is drawn on the chart as a high-probability Verified Cost Basis Zone. These are the "memory zones" where the market is likely to react upon a re-visit.

How to Use This Indicator

• Cost Basis Zones (The Boxes):

  • Green Boxes: Bullish zones where Smart Money likely accumulated positions. When the price returns here, a BUY reaction is expected.

  • Red Boxes: Bearish zones where Smart Money likely distributed positions. When the price returns here, a SELL reaction is expected.

• Zone Strength (★★★): Each zone is created with a star rating. More stars indicate a higher-confidence zone (based on factors like volume intensity and historical confirmation).

• BUY/SELL Signals: A signal is only generated when the price enters a zone AND the confirmation filters (if enabled in the settings) are passed.

• Zone Statuses:

  • Green/Red: Active and waiting to be tested.

  • Gray: The zone has been tested, and a signal was produced.

  • Dark Gray (Invalidated): The zone was broken decisively and is no longer considered valid support/resistance.

Key Settings

• Signal Accuracy Filters: You can enable/disable three powerful filters to balance signal quantity and quality:

  • Momentum Confirmation (Stoch): Waits for momentum to align with the zone's direction.

  • Candlestick Confirmation (Engulfing): Waits for a strong reversal candle inside the zone.

  • Lower Timeframe MSS Confirmation: The most advanced filter; waits for a trend shift on a lower timeframe before giving a signal.

• Historical Confirmation:

  • Require Historical Confirmation: Toggle the "Memory" feature on/off. Turn it off to see all potential SM zones.

  • Tolerance Calculation Method: Choose between a dynamic ATR Multiplier (recommended for all-around use) or a fixed Percentage to define the zone size.