Candlestick Absorption (Pure Price+Volume)

📘 Candlestick Absorption (Pure Price + Volume)

An original approach to detecting hidden institutional absorption using nothing but candle structure and relative volume.

🧠 Concept

Every candle tells a story — not just in its color, but in the battle between aggressive orders and passive liquidity.
This indicator isolates those moments where one side of the market absorbs the other’s aggression — when a candle shows excess wicks on high volume but fails to extend in that direction.

Unlike traditional volume indicators or oscillators, this script focuses solely on the interaction between wick length, body size, and relative volume, giving a pure price–volume perspective of absorption and exhaustion.

⚙️ How It Works
1. Relative Volume Detection
• Compares each candle’s volume to a configurable moving average (default SMA 20).
• Marks only candles with significantly above-average activity (e.g. 1.5× SMA) as eligible for absorption.

2. Wick–Body Anatomy Analysis
• Measures the proportion of each candle’s wicks and body within its total range.
• Focuses on long wicks with small bodies, representing strong push-and-absorb behavior.
• The close must remain off the extreme by a user-defined percentage to confirm that the move was rejected.

3. Absorption Logic
• Bullish Absorption (⬆) → long lower wick, high volume, small body, close away from the low → demand absorbed selling pressure.
• Bearish Absorption (⬇) → long upper wick, high volume, small body, close away from the high → supply absorbed buying pressure.

4. Cooldown & Clarity
• A built-in cooldown prevents repetitive signals in congestion zones.
• Optional translucent absorption zones (boxes) extend forward, helping you visualize where future retests may react.


🎯 How to Use It
• Watch for Absorb ⬆ or Absorb ⬇ markers near swing highs/lows, session extremes, or fair-value gaps — these often highlight zones of institutional absorption or stop-runs.
• Combine with market structure or order-flow context rather than standalone entries.
• Use zones as potential re-entry or rejection levels when price revisits them.
• For intraday use, increase High-Volume Factor to 1.8–2.2 to filter noise.
• For higher timeframes, relax wick/body thresholds slightly to capture broader absorption events.

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🔍 What Makes It Original
• Pure Price + Volume logic — no MAs, RSI, VWAP, or momentum filters.
• Uses dynamic wick-to-range ratios and relative-volume qualification instead of arbitrary thresholds.
• Adaptive visual design: the plotted boxes fade as they age, making absorption footprints visually intuitive.
• Works across any market (stocks, crypto, indices, futures) and timeframe without recalibration.
• Zero repainting. All signals are based on completed bars only.

🧩 Inputs Summary
Volume Filter : Volume SMA Length, High-Volume Factor
Defines how much higher a candle’s volume must be compared to its average

Candle Anatomy : Min Wick % of Range, Max Body % of Range, Close Off Edge %
Controls candle geometry for valid absorption

Signal Logic[/b : Cooldown Bars, color filters
Reduces clutter and false clustering

Zones : Draw Zones, Zone Forward Bars, Opacity Levels
Paints temporary liquidity footprints

Visuals : Background Tint
Highlights active absorption bars

⚠️ Important Notes
• Absorption ≠ instant reversal — it’s often a precursor to exhaustion or liquidity shift.
• Always confirm with structure, trend context, or additional confluence.
• Use at your own discretion; the script makes no performance claims.

💡 Suggested Use Cases
• Identifying trap candles at swing highs/lows.
• Spotting hidden institutional participation before reversals.
• Filtering false breakouts in tight ranges.
• Defining retest zones for Smart-Money or volume-profile strategies.