Order Flow Absorption
Order flow absorption happens when aggressive buyers or sellers hit the book hard and big players quietly absorb all of it without letting price move. It’s one of the strongest signals that someone with size is defending a level, and beginners miss it because they only look at candles instead of liquidity behavior.
What Absorption Actually Is
Absorption means this: aggressive orders are smashing into the book, but price isn’t going anywhere. That only happens when someone with real size is sitting there absorbing every hit.
- buyers hit the ask → price doesn’t lift
- sellers slam the bid → price doesn’t drop
- tape prints heavy one way → market barely moves
This ties directly into concepts like order book dynamics and market depth.
Why Absorption Matters
Absorption tells you a simple truth: someone with size disagrees with the aggressive flow.
- if sellers absorb buys → upside is weak
- if buyers absorb sells → downside is weak
The absorbing side usually wins because they’re the ones with capital to control the pace.
How to Spot Absorption in Real Time
| Clue | What It Means |
|---|---|
| Repeated prints at same price | Someone keeps refilling liquidity |
| Tape is heavy but price is frozen | A large player is absorbing flow |
| Bid/ask size regenerates instantly | Iceberg behavior |
| Failed breakout despite strong aggression | Absorption killing momentum |
Absorption vs. Rejection
Beginners confuse the two. Rejection is price reacting and bouncing quickly. Absorption is price not moving at all despite heavy flow. One is emotional; the other is mechanical.
Where Absorption Usually Happens
Absorption shows up at key liquidity zones:
- prior highs/lows
- range edges
- VWAP
- gap boundaries (see price gap behavior)
- big round numbers
What Absorption Leads To
The absorbing side often becomes the side that drives the next major move:
- seller absorption → likely push up
- buyer absorption → likely push down
If you’ve read mean reversion vs momentum, absorption usually kills momentum and forces a reversal.
How Traders Use Absorption
- fade failed breakouts
- look for reversals at key levels
- tighten stops when absorption forms against your position
- avoid chasing moves running into strong absorption
Bottom Line
Absorption is a heavy-handed clue that strong players are defending a level. Aggressive flow doesn’t move price unless liquidity lets it. Watch who’s absorbing and you’ll know who’s controlling the next move.