Order FlowAdvanced

Absorption

What absorption means in order flow: heavy aggressive selling (or buying) that fails to move price because passive limit orders absorb it, and how to confirm it.

Library categories

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

Heavy selling, no progressReleaseAbsorptionDelta
Strongly negative delta for three candles, but price holds the same area; when the selling stops, price is released upward. Values are schematic.Schematic diagrams drawn to explain the idea; they are not market data.

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.

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.

Selling absorption looks like…

1. Selling absorption looks like…

What confirms absorption?

2. What confirms absorption?

Is absorption proof of a hidden buyer?

3. Is absorption proof of a hidden buyer?

Practise it risk-free

Open the free chart, use replay to go back in time and look for this concept candle by candle with $20,000 in virtual money.