Home -
Brokers -
Main body -

WikiFX Express

Exness
XM
EC Markets
TMGM
FXTM
FOREX.com
AvaTrade
FXCM
IC Markets Global
STARTRADER

Absorption in trading: understanding its dynamics and FAQs

Skilling | 2023-12-29 15:17

Abstract:Absorption in the financial markets is a key concept that helps traders understand market dynamics and depth. This article will explain what absorption is, delve into how it works in trading, answer common questions about absorption, and highlight how Skilling's platform can be utilized in this context.

Absorption in the financial markets is a key concept that helps traders understand market dynamics and depth. This article will explain what absorption is, delve into how it works in trading, answer common questions about absorption, and highlight how Skilling's platform can be utilized in this context.

What is absorption?

Absorption in trading refers to a situation where the market 'absorbs' large orders without a significant price change. This typically occurs at key support and resistance levels where large quantities of buy or sell orders are placed. Absorption is an indicator of strong interest from buyers or sellers at a particular price level and can signal the potential exhaustion of a price move or the strength of a particular market level

How does absorption work?

Absorption works by balancing large orders with an equivalent amount of opposing orders. For example, in a scenario where there's a significant sell order at a particular price level, absorption occurs if there are enough buy orders to match this selling pressure, preventing a downward price movement. This is often observed through volume analysis and can be identified using order flow tools that show the depth of market orders at various price levels.

Example of absorption in CFD trading:

Imagine a scenario in CFD trading where an investor is trading a stock CFD, such as Apple Inc.

As the price of Apple's stock approaches a significant resistance level at $150, a large volume of sell orders is placed, indicating that many traders expect the price to fall from this level. However, if there is a strong presence of buyers who are willing to purchase Apple stock at $150, these buy orders will absorb the selling pressure.

This absorption could stabilize the price at the resistance level, indicating a strong contest between buyers and sellers. If the buyers eventually outweigh the sellers, the price might break through the resistance level, leading to a potential upward trend.

Example of absorption in Forex trading:

In Forex trading, consider the EUR/USD currency pair approaching a key support level at 1.1800. As it nears this level, traders observe a significant increase in sell orders, suggesting a bearish sentiment. However, if there is an equally strong influx of buy orders at this price level, these orders will absorb the selling pressure.

This absorption indicates that the market is not ready to push the price below the support level, showing resilience against the downward trend. If the buying pressure continues to match or exceed the selling pressure, it could lead to a reversal, with the price bouncing back from the support level.

Answers to some FAQs

1. What does absorption indicate in market analysis?

Absorption suggests strong buying or selling interest at a specific price level, potentially signaling a trend reversal or continuation.

2. How can traders identify absorption in the market?

Absorption can be identified through volume analysis and order flow tools, which show large orders being matched by opposing orders at key price levels.

3. Does absorption always lead to a price reversal?

Not necessarily. While absorption can indicate potential reversals, it may also signify the continuation of the current trend if the absorbed orders are eventually outweighed.

4. How important is context in interpreting absorption?

Context, including overall market trends and technical indicators, is essential for accurately interpreting absorption signals.

5. Can absorption be a standalone trading signal?

While absorption provides valuable insights, it's best used in conjunction with other analysis methods for more reliable trading signals.

6. How does absorption differ in high-liquidity markets?

In highly liquid markets, absorption might occur more frequently and require significant order volumes to impact price movements.

7. What role does absorption play in range-bound markets?

In range-bound markets, absorption can be a key factor in maintaining the price within the range, especially at established support and resistance levels.

8. Is absorption relevant in both bullish and bearish markets?

Yes, absorption is relevant in all market conditions, indicating strong buying pressure in bullish markets and strong selling pressure in bearish markets.

img_v2_ff2b99dc-3016-43b7-b9d9-35658d24d40g.png
Broker

Related broker

Regulated
Skilling
Company name:Skilling Ltd
Score
6.24
Website:https://skilling.com/eu/en/
5-10 years | Regulated in Cyprus | Market Maker (MM) | MT4 Full License
Score
6.24

Read more

PO TRADE Review: Massive Trader Complaints Over Withdrawal Blocks

Does your PO TRADE account often witness losses? And as you win trades and earn profits, does the broker block your withdrawal access? Have you faced losses due to manipulative trade practices by the broker? Several traders have reported these experiences online, making us investigate the Saint Lucia-based forex broker. While investigating, we minutely screened these trader reviews of PO TRADE. In this article, we have shared their complaints. Take a look.

Original 2025-10-16 20:45

UTrader Review (Oct 2025): Is It Scam or Legit, Safe?

Do you want to stay scam-free? Learn about the scam brokers operating in the forex market who try to steal people’s money. If that sounds like you, then you should definitely read this UTrader Review and find out if UTrader is scam or safe.

Original 2025-10-16 20:35

Tapbit Exposed: Traders Report Frozen Withdrawals and Sudden Rule Changes

Have you been anxiously waiting for Tapbit to release your withdrawal funds, only to face repeated denials? Does the customer support official fail to respond to your withdrawal queries? Does the broker surprise you with unfair rules, leaving you reeling under losses? You are not alone! Many have been facing these issues for a long time, with a few even approaching legal firms to recover their stuck funds. In this Tapbit review article, we have shared certain complaints traders have raised online. Read on to check their reviews.

Original 2025-10-16 19:52

OKX, Standard Chartered Expand Crypto Partnership in Europe

OKX and Standard Chartered expand crypto partnership in Europe, offering secure custody, MiCA compliance, and institutional-grade digital asset trading.

Original 2025-10-16 19:16

WikiFX Express

Exness
XM
EC Markets
TMGM
FXTM
FOREX.com
AvaTrade
FXCM
IC Markets Global
STARTRADER

WikiFX Broker

FXTM

FXTM

Regulated
Exness

Exness

Regulated
DBG Markets

DBG Markets

Regulated
XM

XM

Regulated
AvaTrade

AvaTrade

Regulated
FXCM

FXCM

Regulated
FXTM

FXTM

Regulated
Exness

Exness

Regulated
DBG Markets

DBG Markets

Regulated
XM

XM

Regulated
AvaTrade

AvaTrade

Regulated
FXCM

FXCM

Regulated

WikiFX Broker

FXTM

FXTM

Regulated
Exness

Exness

Regulated
DBG Markets

DBG Markets

Regulated
XM

XM

Regulated
AvaTrade

AvaTrade

Regulated
FXCM

FXCM

Regulated
FXTM

FXTM

Regulated
Exness

Exness

Regulated
DBG Markets

DBG Markets

Regulated
XM

XM

Regulated
AvaTrade

AvaTrade

Regulated
FXCM

FXCM

Regulated

Latest News

FCA Cracks Down on £1m Ponzi Scheme in UK

WikiFX
2025-10-14 17:39

Want to Trade Via Daicha Iconic Markets Ltd? Wait and Read This Review First!

WikiFX
2025-10-14 20:35

WikiFX Warning: 5 Scam Brokers Exposed in October 2025

WikiFX
2025-10-14 18:53

How to Spot a Forex Scammer Before You Invest

WikiFX
2025-10-14 17:14

Online Trading Scams in Europe Surge as 1,400 Sites Shut

WikiFX
2025-10-15 16:19

FSMA Belgium Warning: 17 Fraudulent Platforms Exposed

WikiFX
2025-10-15 17:25

Slippage in Forex Explained: Key Facts to Improve Your Trading Strategy

WikiFX
2025-10-15 17:02

French PM backs freezing Macron\s pension reform to save government

WikiFX
2025-10-14 14:18

VITTAVERSE Review: Traders Report Withdrawal Denials and Broker Negligence

WikiFX
2025-10-15 19:44

ASIC Licence: A Practical Step-by-Step Guide to Verifying Forex Brokers

WikiFX
2025-10-15 13:49

Rate Calc

USD
CNY
Current Rate: 0

Amount

USD

Available

CNY
Calculate

You may also like

GoldMarketer

GoldMarketer

ProxyOption

ProxyOption

Finance Innovations

Finance Innovations

STERLING PRO WAVES

STERLING PRO WAVES

BITSTACKOPTION

BITSTACKOPTION

Logan-beldex

Logan-beldex

PAXIT

PAXIT

KB

KB

PRIMECAPITAL BROKER

PRIMECAPITAL BROKER

FCL Prime

FCL Prime