Absorption
When large orders soak up aggressive flow without letting price move. Often a sign of exhaustion and an imminent reversal.
Absorption happens when aggressive flow (market orders) hits a level but large passive orders soak it all up without giving way. Volume rises, price doesn't: the aggression burns out.
In depth
Absorption is the tug of war between aggression (market orders, impatient) and passivity (limit orders, patient). When heavy sell flow hits a level but price won't give way, a passive actor is soaking up every contract sold without stepping back. The key tell is the divorce between volume and movement: lots of volume traded, very little price progress.
Absorption is not an entry signal on its own: it's a sign of exhaustion. It shows the aggressive side is tiring. The reversal only confirms when the aggression stops AND price starts moving the other way, often with a visible flip in delta.
On DeepCharts, spot absorption by combining heatmap and footprint: a large passive order that stays displayed on the heatmap, facing a footprint that shows high volume at that price while the candle makes no progress. If the level holds after several waves, the absorption is real.
A wave of market sells, but the bid holds and price stops dropping → buy-side absorption, bounce likely.
Entering too early, the moment you think you see absorption. While aggression continues, the level can still break (the absorber may give up). Wait for proof the aggressive flow has dried up before acting, or you're catching a falling knife.
Frequently asked
How do you tell absorption from a simple slowdown?
Absorption comes with high volume: many contracts trade but price doesn't move. A simple slowdown happens on low volume: nobody is fighting, interest just faded.
Are absorption and iceberg the same thing?
The iceberg is often the technical means of absorption: a hidden order that refills soaks up the flow. Absorption is the observed phenomenon (price not giving way); the iceberg is a frequent cause.
Does absorption guarantee a reversal?
No. It signals likely exhaustion, not certainty. The absorbing level can still break. You wait for confirmation from price and delta before calling the reversal.
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