Absorption Detector [forexobroker]

Absorption Detector identifies bars where institutional players are absorbing opposing order flow. When volume spikes but price barely moves, large orders are quietly filling — absorbing the other side's pressure without letting price break through.

The core insight: a bar with 3x average volume but a tiny body and large wicks means someone is aggressively defending a price level. This is absorption — and it often precedes strong directional moves.

WHAT IS VOLUME ABSORPTION?

Absorption occurs when one side (buyers or sellers) places enough orders to neutralize the other side's pressure:

ABSORPTION SIGNATURE:
High volume (2x+ average)
Small body (< 30% of range)
Large wicks (> 40% of range)
Contained range (not a breakout bar)

Result: Heavy trading activity with no price progress
→ One side is absorbing the other's orders
The indicator classifies absorption into three types based on candle structure and volume intensity.

ABSORPTION TYPES

Type Pattern Volume Meaning
Passive (PAS) Small body, big wicks 2x+ avg Quiet absorption — orders filled without moving price
Aggressive (AGG) Engulfing candle 2x+ avg Active defense — one side aggressively takes control
Exhaustion (EXH) Volume climax + rejection wick 3x+ avg Final push absorbed — pressure fully exhausted

INTENSITY SCORING

Each absorption event receives an intensity score (1-5) based on:

Volume magnitude — How far above average (2x = base, 3x = stronger, 4x+ = extreme)
Wick dominance — One-sided rejection wicks score higher (>75% = bonus)
Type bonus — Exhaustion events get extra weight (rarest and most powerful)
Only events meeting the minimum intensity threshold trigger BUY/SELL signals.

DIRECTION DETECTION

The indicator determines bullish or bearish absorption from wick structure:

Direction Wick Pattern Meaning
Bullish Larger lower wick Selling pressure was absorbed from below — buyers defending
Bearish Larger upper wick Buying pressure was absorbed from above — sellers defending
For aggressive absorption, direction comes from the engulfing pattern (bullish or bearish engulf).

HOW TO READ THE CHART

Visual Element Meaning
Blue label (PAS) Passive absorption — quiet institutional filling
Orange label (AGG) Aggressive absorption — active level defense
Purple label (EXH) Exhaustion absorption — volume climax rejection
Green zone box Bullish absorption area — potential support
Red zone box Bearish absorption area — potential resistance
Green BUY label Quality bullish absorption signal
Red SELL label Quality bearish absorption signal
Gray dots Volume spikes without absorption pattern
Colored bars Bars with detected absorption (colored by type)
SUCCESS RATE TRACKING

The dashboard tracks whether absorption events led to the expected price move within 10 bars:

Bull Success — Percentage of bullish absorptions where price rose afterward
Bear Success — Percentage of bearish absorptions where price fell afterward
This gives you real performance data for the current instrument and timeframe.

FEATURES

Three absorption types: Passive, Aggressive, Exhaustion
Volume spike detection with configurable multiplier
Body-to-range and wick-to-range analysis
ATR-normalized range containment check
Engulfing pattern detection for aggressive absorption
Volume climax detection for exhaustion absorption
Wick dominance analysis for directional bias
Intensity scoring (1-5 scale)
Configurable minimum intensity for BUY/SELL signals
Absorption zone boxes with configurable extension
Bar coloring by absorption type
Historical success rate tracking per direction
Dashboard with volume stats, type counts, success rates
7 alert conditions
Data Window integration
Works on any instrument and timeframe

USE CASES

Support/Resistance Confirmation — When price approaches a key level and you see absorption, it confirms that level is being actively defended. Passive absorption at support = quiet accumulation.

Reversal Detection — Exhaustion absorption (volume climax + rejection wick) at the end of a move signals the trend is running out of fuel. The opposing side has fully absorbed the final push.

Entry Timing — Use BUY/SELL signals from high-intensity absorption events as entry triggers. A 4/5 or 5/5 intensity score means extreme volume was absorbed with minimal price impact — strong hands are in control.

Stop Placement — Place stops beyond the absorption zone. If price breaks through a zone where heavy absorption occurred, the level has failed and the thesis is invalidated.

Confluence Trading — Combine with other indicators:

Volume Cluster Zones — Absorption inside a cluster zone = double confirmation
Delta Divergence Scanner — Absorption + delta divergence = very high conviction
Smart Money Confluence Zone — Absorption at FVG/OB confluence = institutional defense
SETTINGS

Detection: Volume Lookback (20), Volume Spike Multiplier (2.0), Max Body % (30), Min Wick % (40), ATR Length (14), Max Range × ATR (1.5).

Classification: Toggle Passive, Aggressive, and Exhaustion types independently.

Signals: Show BUY/SELL Signals, Min Intensity for Signals (2), Absorption Zones, Zone Extension (20 bars).

Display: Dashboard, Volume Dots, position, text size.

Colors: Bullish (teal), Bearish (red), Passive (blue), Aggressive (orange), Exhaustion (purple).

TECHNICAL NOTES

Volume absorption estimated using candle structure analysis (body-to-range ratio, wick proportions)
Passive absorption requires volume > threshold × average, body < 30% of range, wicks > 40% of range
Aggressive absorption detected via engulfing patterns with volume confirmation
Exhaustion absorption requires 1.5× higher volume threshold plus dominant rejection wick (>60% of total wick)
Range containment check (ATR-normalized) prevents breakout bars from being classified as absorption
Direction determined by wick asymmetry (which wick is larger) or engulfing direction
Success tracking checks if price moved in expected direction within 10 bars
Uses max_labels_count=500 and max_boxes_count=200

DISCLAIMER

This indicator is for educational and informational purposes only. It does not constitute financial advice. Volume absorption analysis uses candle structure approximations since true order flow data is not available on TradingView. Always use proper risk management and combine with other analysis methods.