#9 Absorption (Basic Concept)

---

What Is Absorption?​

Absorption happens when large market orders are absorbed by large limit orders, and price does not move much.

In simple words:

• One side is very aggressive
• The other side is strong enough to hold price

---

How Absorption Happens​

Absorption occurs when:

• Buyers keep buying at market
• Sellers keep selling with limit orders
• Price stays at the same level or moves very little

Or the opposite:

• Sellers keep selling at market
• Buyers absorb with limit orders

---

What Absorption Looks Like​

Typical signs:

• High volume at one price
• Little or no price movement
• Repeated trades at the same level

Example:

• Many market buys hit the ask
• Ask size keeps refilling
• Price does not go up

This means:

• Sellers are absorbing buyers

---

Absorption vs Large Orders​

• Large market orders try to move price
• Absorption prevents price from moving

This usually happens in:

• Deep markets
• High-liquidity areas
• Important price levels

---

Why Absorption Matters​

Absorption tells you:

• There is strong interest at that price
• One side is defending a level
• A move may pause, reverse, or later break

At beginner level, do not predict the outcome.
Just recognize that absorption is happening.

---

Beginner Tip​

Absorption is not a signal by itself.

Use it only to understand:

• Why price stopped
• Why large orders did not move price

---

 

#8 Large Orders and Price Movement

#10 Imbalance