Institutional Absorption Index (IAI)🧠 Institutional Absorption Index (Z-Score)
This indicator is built to detect institutional absorption behavior by measuring how much volume is required to move price 📊.
When large volume produces little price movement, it usually signals smart money activity, iceberg orders and hidden liquidity 🐋.
⚙️ How It Works
The logic is simple and efficient:
🔹 Absorption Formula:
Volume ÷ Candle Range
🔹 Normalized using Z-Score (statistical deviation) 📐
🔹 Smoothed with EMA for cleaner institutional signals 📈
This process filters noise and highlights abnormal market behavior caused by large players.
🎯 Level Interpretation
⚪ 0 Level — Neutral Zone
Market operating normally.
No relevant institutional footprint.
🟡 Above 1.8 — Institutional Absorption Zone
High volume being absorbed without strong price movement.
Usually appears during:
✅ Accumulation
✅ Distribution
✅ Price defense zones
🔴 Above 2.5 — Iceberg Zone
Extreme absorption behavior 🚨
Strong probability of:
🐳 Hidden liquidity
📦 Iceberg orders
🏦 Position building by institutions
🛠 How To Use
This is NOT a buy/sell signal indicator ❌
This is a market participation and structure reading tool ✅
Best use cases:
📌 Detect accumulation & distribution
📌 Confirm manipulation phases
📌 Validate breakout quality
📌 Spot fake moves vs real expansion
📌 Combine with structure, liquidity sweeps and volume profile
⚡ Recommended Settings
✔ Window Length: 20
✔ Smoothing: 5
(Default values are optimized for most markets)
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