What proximity sensor should I use

Can you show more information about your design requirments? What you said is not enough at all. First of all, a proximity sensor is a sensor able to detect the presence of nearby objects without any physical contact. Like the metal detector at the airport as an example, without any physical contact the device (metal detector) can realize if a piece of metal have passed through the gate or not. Let's get in deep on the operation of the proximity sensor, a proximity sensor often emits an electromagnetic field or a beam of electromagnetic radiation (infrared), and looks for changes in the field or return signal. The object being sensed is often referred to as the proximity sensor's target. Different proximity sensor targets demand different sensors. For example, a capacitive photoelectric sensor might be suitable for a plastic target; an inductive proximity sensor always requires a metal target.

Examples of Proximity Sensors:

Ultrasonic Transducers

Photoelectric sensors

inductive and capacitive proximity sensor

Proximity sensors are not the only solution, you can use to electromechanicl solution to detect water level as an example