Definition
Absorption occurs when substantial supply is met by professional demand, often producing high volume while price holds, rejects lows, or makes limited downward progress. Once supply is exhausted, price can advance more easily.
Market psychology
Large buyers accept inventory from motivated sellers without allowing a proportionate decline.
Recognition rules
- High activity appears near support
- Price holds despite persistent selling
- Down bars close off lows or lose spread
- A later test shows reduced supply
Common mistakes
- Equating all high volume with absorption
- Ignoring whether price actually holds
Teaching example
Loading OHLCV chart…
Read a text alternative
Persistent effort fails to extend the decline. The cluster, rather than any isolated candle, suggests demand is absorbing supply.
- Market phase
- Accumulation
- Pattern
- Stopping Volume
- Timeframe
- H4
What reveals absorption most clearly?
Opposing demand is inferred when large effort fails to produce expected downside progress.