[Teyo69] T1 Short & Long Covering

📘 Overview
The Short & Long Covering indicator is designed to help traders detect potential absorption candles and short-covering traps using a combination of normalized volume behavior and price exhaustion logic.

It visualizes possible long opportunities after sell-offs and short traps after price rallies—ideal for traders who want to anticipate reversals based on volume structure.

🧩 Features
📈 Detects rising price with falling volume → potential short covering
📉 Detects falling price with falling volume → potential long absorption
🔍 Flags volume spike conditions using normalized volume vs MA
🔵 Plots “L” (Long Covering) below bars
🔴 Plots “S” (Short Trap) above bars
Customizable pivot lookback and exhaustion period

⚙️ How to Use
Use "L" markers as possible long re-entry points after shakeouts
Use "S" markers to watch for failed rallies or bull traps
Combine with S/R zones or trend filters to confirm
Works well in conjunction with Wyckoff-style market logic or volume spread analysis (VSA)

🔧 Configuration

• Price movement Lookback: Sets how many bars to compare for trend detection
  
• Exhaustion Lookback: Defines the recent window to confirm price is exhausted
  
• Normalized Volume MA Length: Used to determine volume spikes relative to average
  

⚠️ Limitations

• Not a standalone signal — should be used with confluence (e.g., support/resistance, trend filters)
  
• Best for spotting potential reversals, not trend-following entries
  
• May generate false signals in low volume chop or news spikes
  

💡 Advanced Tips

• Combine with a trend filter like appropriate EMA to avoid counter-trend setups
  
• Use with a support/resistance script to find confluence zones
  
• Watch for clustered L/S signals — multiple signals in a zone may show strong absorption or distribution
  

📝 Notes

• Signal logic is based on volume exhaustion and price movement divergence
  
• Normalized volume helps compare relative volume across time
  
• “Spike” condition triggers only when volume exceeds 100% of its moving average
  

🚫 Disclaimer
This script is for educational purposes only. It does not constitute financial advice. Always do your own research and use proper risk management.