Order Flow Analysis

Order Flow Pressure Suite — Wick, Volume & Absorption-Based Pressure Map

This indicator builds a composite buying/selling pressure score from candle structure, volume behavior, and absorption signals.
It is designed to infer the “intent” behind price moves by looking at how candles form, where they close, and how volume behaves — even without access to true bid/ask or footprint data.

Core Concepts
Wick-to-Body Analysis
The script evaluates the ratio of upper and lower wicks to the total candle range.
Strong wicks with relatively small bodies are treated as rejections:

• Long upper wick → potential selling pressure / rejection of higher prices
  
• Long lower wick → potential buying pressure / rejection of lower prices
  

*Close Position Analysis
The close is normalized within the candle range:

• Close near the high → bullish pressure
• Close near the low → bearish pressure
• Close near the middle → more neutral, context taken from wicks and volume
  

Volume Delta Estimation
Since true bid/ask data is not available on standard charts, the script estimates “volume delta” by distributing total volume between buyers and sellers based on candle characteristics:

• Bull candles receive more “buying volume,” weighted toward closes near the high
  
• Bear candles receive more “selling volume,” weighted toward closes near the low
  
  

This is an approximation of order flow, not a direct time & sales feed.

Absorption Detection
The script looks for candles where volume is high but price movement is relatively small.
This combination often suggests:

• Bullish absorption → buyers absorbing aggressive selling (potential accumulation)
  
• Bearish absorption → sellers absorbing aggressive buying (potential distribution)
  

Absorption zones are tracked over a configurable lookback and can be shaded in the background.

Composite Pressure Oscillator
All the above components (wicks, close position, heuristic volume delta, absorption bias) are blended into a single pressure score:

• Values > 0 → net buying pressure
• Values < 0 → net selling pressure

The raw score is smoothed with an EMA to reduce noise and create a cleaner oscillator line.

*Divergence Detection
The indicator compares price pivots to pressure pivots:

• Bullish divergence: price makes a lower low while pressure makes a higher low
  
• Bearish divergence: price makes a higher high while pressure makes a lower high
  

These conditions can help highlight potential exhaustion or hidden participation from larger players.

Visual Elements

• Histogram showing the intensity of buying/selling pressure
  
• Color-coding for increasing vs. decreasing pressure
  
• Background shading for detected absorption zones
  
• Status table summarizing current pressure, trend bias, volume delta, wick signal, and absorption state in real time
  

How To Use

• Use the pressure oscillator to gauge whether the current bar sequence is dominated by buyers or sellers. Strong positive readings may indicate sustained buying pressure; strong negatives may indicate sustained selling pressure.
  
• Watch for divergences between price and the pressure oscillator around key levels, swings, or zones you already care about.
  
• Use absorption zones and wick rejection signals as additional context around support/resistance, breakouts, or failed moves.
  
• Treat all signals as context and confluence, not as stand-alone trade entries or exits. This tool is best used alongside your existing price action, volume, and risk management framework.
  

Important Notes & Limitations

• This script does not access real bid/ask, footprint, or order book data. All volume delta and absorption interpretations are heuristic estimates derived from OHLCV candles.
  
• Signals are probabilistic, not guarantees. They can be early, late, or outright wrong in fast or low-liquidity markets.
  
• Always validate signals with your own analysis, timeframe alignment, and risk management. This indicator is intended as an analytical tool, not financial advice.