Absorption Bubbles

SUMMARY
This indicator visualizes absorption events by plotting bubbles on candle wicks where volume activity suggests one side of the market is absorbing the other’s pressure. Instead of raw volume, the script normalizes activity against a rolling standard deviation defined by the Lookback Period. Bubbles appear on upper or lower wicks depending on whether buyers or sellers are absorbing pressure. The goal is to highlight whether aggressive orders are being accepted or absorbed at key price points.

METHODOLOGY
Absorption occurs when one side of the market absorbs aggressive orders from the other, preventing continuation. The script measures normalized volume against a user‑defined threshold to filter out weaker signals.

• Green bubbles on upper wicks → Selling absorption (buyers push price up, sellers absorb the buying).
  
• Red bubbles on lower wicks → Buying absorption (sellers push price down, buyers absorb the selling).
  
• Red‑colored bars highlight candles where large volume is concentrated inside the body, signifying aggressive selling activity.
  
• Green‑colored bars highlight candles where large volume is concentrated inside the body, signifying aggressive buying activity.
  

The Lookback Period controls how many bars are used to calculate the rolling standard deviation of volume, letting traders adjust sensitivity to recent vs. longer‑term activity. Optional significant volume lines extend forward, marking areas where absorption was strongest.

FUNCTIONS

• Normalized volume detection using rolling standard deviation
  
• Adjustable Lookback Period for volume normalization
  
• Dynamic bubble plotting on candle wicks (size scales with absorption strength)
  
• Separate visualization for buying vs. selling absorption
  
• Alerts for buying absorption, selling absorption, or any absorption event (only at bar close)
  
• Bar coloring when large absorption occurs inside candle bodies
  

APPLICATION

• Setup: Add the script to any chart and timeframe. Adjust the Absorption Threshold to filter out weaker bubbles and the Lookback Period to control how volume normalization is calculated. Red bubbles highlight buying absorption, often signalling potential price pivots - price can often go upwards from this. Green bubbles mark selling absorption, reflecting resistance to upward moves - price may go downwards from this.
  

Interpretation:

• Green bubbles on upper wicks = sellers absorbing buying pressure.
  
• Red bubbles on lower wicks = buyers absorbing selling pressure.
  
• Larger bubbles = stronger absorption relative to recent volume.
  

Settings & Use:
Raising the Absorption Threshold filters out smaller bubbles, leaving only significant absorption events.
Changing the Lookback Period alters how “normal” volume is defined — shorter periods make the script more sensitive, longer periods smooth out noise.

Alerts can be set for buying absorption, selling absorption, or any absorption event, and they only trigger at bar close to avoid noise.