CHARTTHREAD

Absorption

Absorption is when one side of the market takes everything the other side throws at it, so price stops moving even though aggressive orders keep coming.

Sellers can hit the bids again and again, but if a buyer with enough size keeps taking every share or contract they sell, price stops falling. On the chart this often leaves a long lower wick: price was pushed down, the selling was absorbed, and price returned. The mirror case, sellers absorbing aggressive buying, leaves a long upper wick.

Learn more: what is a market? and what does a long wick mean?.