Absorption
What Is Absorption
Absorption happens when aggressive orders hit the market, but price does not move.In simple words:
One side is attacking, the other side is quietly absorbing.
How to Trade Absorption (Footprint – Intraday)
1. Start With Location (Most Important)
Absorption is only tradable at important prices.
High-quality locations:
- Session high or low
- VWAP
- Value Area High / Low
- Prior day high or low
- Unfinished auction level
2. Identify Aggression on the Footprint
Look for:- Large market orders hitting one side
- Strong delta (positive or negative)
- Repeated prints at the same price
Aggressive traders are active.
3. Confirm Lack of Price Progress
This is the key condition.Absorption is valid only if:
- Volume increases
- Delta increases
- Price does not advance
4. Identify the Absorbing Side
- Heavy buying + price not going higher → sell absorption
- Heavy selling + price not going lower → buy absorption
5. Wait for Failure of Aggression
Do not enter on absorption alone.Wait for:
- Delta stall or flip
- Failed continuation above/below the level
- One or two footprint bars unable to extend
6. Entry Execution (Simple Model)
- Enter on the first rotation away from the absorbed level
- Entry should be:
- After price fails to break
- With reduced aggression
7. Stop Placement
Stops must be tight and logical:- Just beyond the absorption level
- Beyond the defended high or low
8. Profit Targets
Intraday targets:- VWAP
- Session midpoint
- Value area opposite edge
- Recent liquidity zone
9. Common Mistakes
- Trading absorption without location
- Entering before aggression fails
- Using absorption in low-volume conditions
- Expecting every absorption to reverse
One-Line Trading Rule
Absorption is traded only after aggression fails at a key level.
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