Indicator Overview
The Global Liquidity Stress Indicator measures market stress by analyzing liquidity momentum across short, medium, and long timeframes. It outputs a Stress Composite Score and classifies conditions into four levels: This adaptive, multi-timeframe approach enables early detection of stress buildup or relief.
- Severe Stress (Red)
- Moderate Stress (Orange)
- Mild Stress (Yellow)
- Normal (Green)
This adaptive, multi-timeframe approach enables early detection of stress buildup or relief.
Core Methodology
- Calculates 3 Rate-of-Change (ROC) signals across fast, medium, and slow timeframes
- Each ROC is scaled and smoothed (12–14 periods), then blended to form the Stress Composite
- Stress thresholds are dynamically adjusted using a volatility-based modifier
- A 4-period ROC on the composite tracks stress trend direction
Key Components
- Multi-Timeframe ROC: Fast (weighted most), Medium, and Slow ROCs reflect short to long-term liquidity trends
- Stress Composite: Weighted formula: (Fast × 0.5) + (Medium × 0.3) + (Slow × 0.2)
- Volatility Adjusted Thresholds: Adaptive factor based on rolling volatility defines stress zone boundaries
- Trend Overlay: Trend direction derived from short-term momentum of the composite
How To Use This Indicator
- Interpret Stress Zones:
Red = Severe stress (risk-off), Orange = Moderately elevated, Yellow = Cautionary, Green = Normal conditions - Watch for Trend Direction:
Fading colors suggest easing stress; brightening colors indicate rising stress - Visual Representation:
Color-coded zones (green to red) show stress level; opacity shifts reflect momentum; ideal as an overlay on asset charts like BTC
Created By
Alpha Extract in May 2025