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50 lines
2.7 KiB
Markdown
50 lines
2.7 KiB
Markdown
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# Absorption Pro (Indicator)
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## 1. Summary
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**Absorption Pro** is a specialized Volume Price Analysis (VPA) tool designed to detect **Institutional Intervention** (Smart Money activity). It identifies specific candles where massive volume is traded but price movement is restricted ("Effort vs. Result" anomaly), signaling that a large player is absorbing the order flow.
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The indicator visualizes these events not just as signals, but as **Active Supply/Demand Zones** that remain valid until the price breaks through them.
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## 2. Methodology & Logic
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The indicator combines volatility, volume, and candle structure to identify three specific market conditions:
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### A. The Signal Logic
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1. **High Effort:** Relative Volume (`RVOL`) > 2.0. (Volume is 200% of average).
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2. **Low Result:** Candle Body < 0.35 * ATR. (Price failed to move proportionally to the volume).
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3. **Direction:** Determined by the Close position within the High-Low range.
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* **Bullish Absorption:** Close in the upper 66% (Buying absorbed the selling pressure).
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* **Bearish Absorption:** Close in the lower 33% (Selling absorbed the buying pressure).
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### B. The Climax Logic
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* **Condition:** `RVOL > 3.5` AND `Body < 0.6 * ATR`.
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* **Meaning:** Extreme volume exhaustion. Often marks the exact top or bottom of a trend.
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## 3. Visualization
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* **Arrows:** Marks the signal candle immediately.
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* 🟢 **Green Arrow:** Bullish Absorption (Potential Bottom).
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* 🔴 **Red Arrow:** Bearish Absorption (Potential Top).
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* **Active Zones (Rectangles):** Draws a shaded box covering the High/Low of the signal candle.
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* **Dynamic Extension:** The box automatically extends to the right into the future.
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* **Breakout Detection:** The box stops extending (terminates) the moment a future candle closes *beyond* the zone limits. This keeps the chart clean and shows only valid, untested levels.
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## 4. Parameters
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* `InpATRPeriod`: Lookback for volatility normalization (Default: `14`).
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* `InpRVOLPeriod`: Lookback for volume average (Default: `20`).
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* `InpHistoryBars`: How far back to scan for signals (Default: `500`). Keep this reasonable to save performance.
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* `InpShowObjects`: Toggle drawing of the Supply/Demand rectangles. (Buffers are always calculated).
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## 5. Strategic Usage
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1. **Reversal Entry:**
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If price approaches a support level and **Absorption Pro** prints a Green Arrow + Zone, it is a high-confidence reversal signal (Limit orders are active).
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2. **Breakout Failure (Fakeout):**
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If price breaks out of a range but immediately prints an opposing Absorption signal, the breakout has likely failed (Trapped Traders).
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3. **Target Selection:**
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The extended rectangles act as magnets. If you are in a trade, use the *next* active Absorption Zone as your Take Profit target.
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