Absorptions

Developing skill in recognizing absorption patterns is a game-changing improvement for trading performance. When sellers appear on a bottom wick, they were absorbed by a larger buyer, causing upward price reversal. When a large buyer's order is absorbed by sellers — meaning selling pressure initially overwhelms their buying — this is a bearish signal until absorption is complete. A large buy trade appearing on a top wick indicates that buyers were absorbed by an even larger seller. Once buyers absorb a major seller position, buyers take control of the price auction and price reverses upward. Absorptions likely have directional potential, distinguishing them from stop runs. Aggressive buyer absorption at support levels with increasing volume indicates that buyers are taking control of the auction. The seller's volume overwhelms buyers' intentions when buyers are absorbed on top wicks, causing downward price reversal. Inability to identify absorption prevents proper setup evaluation and causes missed high-probability opportunities. Absorption without follow-through — where a large buyer steps in but fails to hold price — is a signal to exit the position. Absorption is one of the mai…