What is absorption in order flow?

Aggressive orders against resting orders

Every trade has two sides. A market order is aggressive: it takes whatever is resting in the book at the best price. A limit order is passive: it rests and waits to be hit. When sellers send market orders, they trade against resting bids. When buyers send market orders, they trade against resting offers.

Usually, steady aggressive selling eats through the bids and price ticks lower. Absorption is the case where that does not happen. The bids keep getting refilled, by one large participant or by many, and price holds while the selling goes on.

What absorption looks like

You see absorption by comparing what traded with what price did:

• Volume on one side is well above normal for the time of day.
• Price stays within a tick or two of the same level while that volume trades.
• The resting orders at that price are refilled after they are hit, instead of running out.
• The aggressive side starts to fade: smaller prints, longer gaps between them.

Attack, absorbed, counter-attack

Absorption tends to play out in steps. First one side attacks with aggressive orders. Then the other side absorbs it and price holds. Sometimes the absorbing side then starts pushing back, which is a counter-attack.

Each step is easier to trust once a candle has closed. A price that holds for ten seconds can still break on the next print; a price that holds through a one-minute close, with the absorbing side then taking a bigger share of the volume, tells you more.

What absorption does not tell you

Absorption is an observation about who is trading and what price is doing. It does not say where price will go next. The absorbing side can be overwhelmed later, and a level that absorbed one push can give way on the next. Treat it as context next to your own plan and risk limits, not as a signal on its own.

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