What it means
Absorption is when aggressive orders hit one side heavily but price barely moves, because large passive limit orders on the other side fill them. Selling absorption: strong negative delta while price holds a level.
Why traders use it
If sellers are hitting bids hard and price still does not fall, someone is buying everything. When the selling stops, price can move up quickly (the "release").
Chart examples
Selling absorbed at support
How to identify it objectively
- 1Look for strongly negative delta (or high sell volume) over several candles.
- 2Price makes little or no progress lower; wicks hold the same area.
- 3On a footprint, heavy volume on the bid at the same prices.
- 4Confirmation: delta flips and price moves away from the area.
Bullish use
- 1Heavy selling at a support level.
- 2Price holds; lows are not broken.
- 3A bullish candle with positive delta releases price upward.
Bearish use
- 1Heavy buying at a resistance level.
- 2Price holds below; highs are not broken.
- 3A bearish candle with negative delta releases price downward.
What confirms it
- Effort without result over several candles.
- A release candle in the other direction.
What invalidates it
- Price breaks the level with continued aggression.
How a hypothetical setup is built
Entry
On the release candle's close.
Stop
Beyond the absorption area.
Target
The next liquidity level.
A hypothetical illustration of how the concept is turned into a plan, not a recommendation. Practise it on a paper account first.
Related concepts
- Order FlowExhaustion
- Order FlowDelta and CVD Divergence
- Order FlowStacked Imbalances
- Full guide on The TradeskillFootprint Chart Explained
- Full guide on The TradeskillOrder Flow Trading Explained
Historical testing
Not tested on The Tradeskill. Absorption is an inference from executed volume; resting orders can be pulled at any time.
Limitations: when it fails
- Visible only with trade-level data.
- Large orders can be iceberg orders or can be cancelled.
- Absorption can fail and become a breakout.
Knowledge check
Pick an answer to see the explanation. Nothing is saved.