Absorption
Large passive orders soak up aggressive selling or buying - price stalls, the aggressor runs dry, and the market reverses.
How it works
Absorption happens when aggressive market orders hit a level but price doesn't move. Someone is sitting there with a large passive order (limit order), absorbing all the selling or buying pressure. On the footprint, you see high volume at a single level with minimal price movement. On the DOM, you see a large bid or ask getting hit repeatedly but not breaking.
Once the aggressive side exhausts itself, the passive side has accumulated a large position - and now they want price to move in their direction.
Long Setup
BuySellers dump 1,847 contracts into the bid at 4251.50, but price doesn't break below.
Passive buyer absorbs everything. Delta goes deeply negative (-1,751) yet the level holds.
Selling exhausts and price ticks back up. The next bar shows buyers lifting the ask (540 vs 210).
Context
Price is pushing down into a support level, prior low, or high-volume node on the profile. Sellers are aggressive - market sell orders are hitting the bid.
What to look for
- + High volume printing at a single price level on the footprint - sellers hitting but price not breaking lower
- + Large resting bid on the DOM getting repeatedly hit but refreshing
- + Delta at the level is heavily negative, but price holds - the passive buyer is absorbing
- + Tape shows a cluster of large sell prints at the same price
Trigger
Selling dries up (delta flattens or flips), price ticks above the absorption level, and aggressive buyers start lifting the ask. Enter long on the first sign of upside follow-through.
Stop
Below the absorption level. If the passive order breaks, the thesis is dead.
Short Setup
SellBuyers lift 1,923 contracts off the ask at 4254.25, but price can't push through.
Passive seller absorbs all of it. Delta runs heavily positive (+1,835) yet the level caps price.
Buyers exhaust and price rolls over. Next bar shows sellers hitting the bid (640 vs 180).
Context
Price is pushing up into resistance, a prior high, or the top of a value area. Buyers are aggressive - market buy orders are lifting the ask.
What to look for
- – High volume at a single level on the footprint - buyers hitting but price not breaking higher
- – Large resting ask on the DOM getting lifted repeatedly but refreshing
- – Delta at the level is heavily positive, but price stalls - the passive seller is absorbing
- – Tape shows cluster of large buy prints at the same price with no follow-through
Trigger
Buying dries up, price ticks below the absorption level, and aggressive sellers start hitting the bid. Enter short on downside follow-through.
Stop
Above the absorption level. If price breaks through the passive seller, you're wrong.
Things to watch out for
- 1. Absorption works best at established levels - random absorption in the middle of a range is noise.
- 2. Confirm with delta. If the absorber wins, delta should flip direction after the absorption.
- 3. Large passive orders can be institutional or algorithmic. Either way, they're defending a level for a reason.
- 4. Don't front-run. Wait for the aggressor to exhaust and price to reverse - the absorption alone isn't the entry.
Best platforms for this setup
Any platform with a footprint chart and DOM works. Jigsaw excels here - Depth & Sales was designed for reading absorption. ATAS and Bookmap also show it clearly through cluster charts and heatmaps respectively.