Absorption
Version: v.1.0.0.0
Description
Absorption identifies hidden accumulation or distribution by analyzing the imbalance between aggressive buy and sell volumes during periods of limited price movement. It highlights areas where market participants absorb pressure without allowing significant price shifts, signaling potential reversals or continuation points.
Important
For historical absorption signals to appear, please enable the Tick Replay option on your chart. The indicator relies on the OnMarketData method, which requires Tick Replay to reconstruct historical market data accurately.
The indicator provides three data series:
- Abs — signals the absorption direction, returning 1 for buy absorption and -1 for sell absorption;
- Lowest — stores the lower price boundary of the absorption zone;
- Highest — stores the upper price boundary of the absorption zone.
These data series can be used for building automated strategies, including in Strategy Builder or third-party tools such as BloodHound.
Properties
- Lookback Period [default: 3, range: 1–∞] — Number of bars to look back for absorption detection.
- Price Threshold (%) [default: 0.05, range: 0.01–∞] — Maximum allowed price movement (as a percentage) to consider absorption.
- Volume Ratio [default: 3, range: 0.01–∞] — Minimum volume ratio between buy and sell volume to qualify as absorption.
- Buy side color — Color used to highlight buy side absorption.
- Sell side color — Color used to highlight sell side absorption.
- Absorption opacity [default: 25, range: 1–∞] — Set opacity value from 0 to 100 for absorption rectangle.