Institutional Absorption Index (IAI)

4 วันที่ผ่านมา

🧠 Institutional Absorption Index (Z-Score)

This indicator is built to detect institutional absorption behavior by measuring how much volume is required to move price 📊.
When large volume produces little price movement, it usually signals smart money activity, iceberg orders and hidden liquidity 🐋.

⚙️ How It Works

The logic is simple and efficient:

🔹 Absorption Formula:
Volume ÷ Candle Range

🔹 Normalized using Z-Score (statistical deviation) 📐

🔹 Smoothed with EMA for cleaner institutional signals 📈

This process filters noise and highlights abnormal market behavior caused by large players.

🎯 Level Interpretation
⚪ 0 Level — Neutral Zone

Market operating normally.
No relevant institutional footprint.

🟡 Above 1.8 — Institutional Absorption Zone

High volume being absorbed without strong price movement.
Usually appears during:

✅ Accumulation
✅ Distribution
✅ Price defense zones

🔴 Above 2.5 — Iceberg Zone

Extreme absorption behavior 🚨

Strong probability of:

🐳 Hidden liquidity
📦 Iceberg orders
🏦 Position building by institutions

🛠 How To Use

This is NOT a buy/sell signal indicator ❌
This is a market participation and structure reading tool ✅

Best use cases:

📌 Detect accumulation & distribution
📌 Confirm manipulation phases
📌 Validate breakout quality
📌 Spot fake moves vs real expansion
📌 Combine with structure, liquidity sweeps and volume profile

⚡ Recommended Settings

✔ Window Length: 20
✔ Smoothing: 5

(Default values are optimized for most markets)

4 วันที่ผ่านมา

เอกสารเผยแพร่

🧠 Institutional Absorption Index (Z-Score)

This indicator is built to detect institutional absorption behavior by measuring how much volume is required to move price 📊.
When large volume produces little price movement, it usually signals smart money activity, iceberg orders and hidden liquidity 🐋.

⚙️ How It Works

The logic is simple and efficient:
🔹 Absorption Formula:
Volume ÷ Candle Range
🔹 Normalized using Z-Score (statistical deviation) 📐
🔹 Smoothed with EMA for cleaner institutional signals 📈
🔹 Fast with WMA to capture institutional intent and early alerts on lower timeframes ⚡

This process filters noise and highlights abnormal market behavior caused by large players.

🎯 Level Interpretation
⚪ 0 Level — Neutral Zone

Market operating normally.
No relevant institutional footprint.

🟡 Above 1.8 — Institutional Absorption Zone

High volume being absorbed without strong price movement.
Usually appears during:
✅ Accumulation
✅ Distribution
✅ Price defense zones

🔴 Above 2.5 — Iceberg Zone

Extreme absorption behavior 🚨

Strong probability of:
🐳 Hidden liquidity
📦 Iceberg orders
🏦 Position building by institutions

🛠 How To Use

This is NOT a buy/sell signal indicator ❌
This is a market participation and structure reading tool ✅

1) Index ↓ + Price ↓
Decline without absorption.
Institutions are not defending price.
➡️ Bearish continuation, dominant selling pressure.

2) Index ↑ + Price ↑
Rally with absorption.
Institutional buying flow active and sustained.
➡️ Healthy bullish trend.

3) Index ↑ + Price ↓
Absorption against the move.
Institutions buying into weakness while retail sells.
➡️ Potential bottom or reversal zone.

4) Index ↓ + Price ↑
Rally without absorption.
Weak move, possible institutional distribution.
➡️ Watch for top or pullback.


Best use cases:
📌 Detect accumulation & distribution
📌 Confirm manipulation phases
📌 Validate breakout quality
📌 Spot fake moves vs real expansion
📌 Combine with structure, liquidity sweeps and volume profile

⚡ Recommended Settings
✔ Window Length: 20
✔ Smoothing: 5
✔ Fast: 3


(Default values are optimized for most markets)

เมื่อวานซืน

เอกสารเผยแพร่

The Institutional Absorption Index (IAI) is a high-precision analytical tool designed to identify where large market participants (Institutional Money) are active by measuring Absorption and Execution Pressure.

Unlike standard volume indicators, this engine focuses on the relationship between Volume and Price Spread (VSA), normalized through a Z-Score algorithm. This allows the trader to see beyond the noise and identify when a high volume of orders is being "absorbed" at key price levels.

Core Mechanics
Absorption Z-Score: We calculate the "Efficiency" of volume per unit of movement. When this ratio spikes above statistical norms (Z-Score > 1.8), it indicates significant institutional interest.

Dual-Smoothing Architecture:

Structural Flow (Primary): A medium-term EMA that identifies the dominant institutional trend and intent.

Tactical Flow (Fast): A reactive WMA designed for timing entries and spotting immediate shifts in pressure.

Polarized Pressure Logic: The indicator dynamically colors the flow based on where the candle closes relative to its range.

Green Areas: Buying pressure/Short absorption.

Red Areas: Selling pressure/Long absorption.

Key Zones
Institutional Threshold (1.8): The "Entry Point" for big players. Activity above this level is no longer retail-driven.

Iceberg Zone (2.5+): Extreme absorption. This often signals a climax or the presence of hidden "Iceberg Orders," suggesting an imminent reversal or trend exhaustion.

How to Trade with It
Trend Confirmation: Look for the Institutional Flow (colored area) to stay above 0 and maintain a consistent color.

Reversal Warning: If price makes a new high but the Flow Engine shows a Yellow Dot (Extreme Absorption) followed by a color flip, a top is likely forming.

Volume Validation: Use it to confirm if a breakout is real (high Z-Score) or a trap (low Z-Score).

Terms of Use
© 2026 Denis, Institutional Absorption Index (IAI). All rights reserved. This script is protected by copyright law. Unauthorized redistribution, modification, or commercial use without explicit permission is strictly prohibited. This indicator is provided for educational purposes only. The author is not responsible for trading decisions or financial losses.