By Marco BösingWhat Is an Absorption?
An absorption is a central order flow signal in which aggressive market orders are absorbed by passive limit orders without price moving significantly in the direction of the aggression. Imagine the market is hit by a wave of aggressive buying, yet price does not rise — this means massive limit sell orders on the ask side are absorbing the buys.
Absorptions indicate that a large market participant is building or defending a position. They are frequently observed at turning points and can provide both bullish and bearish signals, depending on which side they occur.
In the footprint chart, absorptions are identified by high volume without corresponding price movement. In the delta, a divergence often appears: high aggressive volume, but no price reaction.