Home -
Brokers -
Main body -

WikiFX Express

Exness
XM
EC Markets
TMGM
FXTM
FOREX.com
AVATRADE
IC Markets Global
FXCM
ACCM

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

FXPIG Exposed: Traders Report Withdrawal Denials, Fund Scams & Regulatory Flags

Do you face massive losses due to astonishing spreads at FXPIG? Have you witnessed multiple trade executions by the Georgia-based forex broker even though you wanted to execute a single order? Has this piled on losses for you? Is the FXPIG withdrawal too slow? Maybe your trading issues resonate with some of your fellow traders. In this FXPIG review article, we have shared these issues so that you can introspect them thoroughly before deciding on the best forex trader.

Original 2025-11-18 21:04

Does WealthFX Generate Wealth or Losses for Traders? Find Out in This Review

The name WealthFX sounds appealing for all those wishing for a rewarding forex journey. However, behind the aspiring name are multiple complaints against the Comoros-based forex broker. These trading complaints dampen the broker’s reputation in the forex community. In this WealthFX review article, we have shared some of these complaints here. Take a look!

Original 2025-11-18 19:20

FXPrimus Review: Is FXPrimus Regulated and Reliable for 2025?

FXPrimus is a CySEC-regulated forex broker offering MT4, MT5, and WebTrader with flexible leverage and diverse trading instruments since 2009.

Original 2025-11-18 19:11

IG Japan to Halt Crypto ETF CFDs as FSA Tightens Rules

IG Japan will end cryptocurrency ETF CFDs after new FSA guidance, forcing traders to close positions by January 31, 2026, under stricter crypto rules.

Original 2025-11-18 18:45

WikiFX Express

Exness
XM
EC Markets
TMGM
FXTM
FOREX.com
AVATRADE
IC Markets Global
FXCM
ACCM

WikiFX Broker

FXTM

FXTM

Regulated
Exness

Exness

Regulated
TMGM

TMGM

Regulated
EC Markets

EC Markets

Regulated
eightcap

eightcap

Regulated
CPT Markets

CPT Markets

Regulated
FXTM

FXTM

Regulated
Exness

Exness

Regulated
TMGM

TMGM

Regulated
EC Markets

EC Markets

Regulated
eightcap

eightcap

Regulated
CPT Markets

CPT Markets

Regulated

WikiFX Broker

FXTM

FXTM

Regulated
Exness

Exness

Regulated
TMGM

TMGM

Regulated
EC Markets

EC Markets

Regulated
eightcap

eightcap

Regulated
CPT Markets

CPT Markets

Regulated
FXTM

FXTM

Regulated
Exness

Exness

Regulated
TMGM

TMGM

Regulated
EC Markets

EC Markets

Regulated
eightcap

eightcap

Regulated
CPT Markets

CPT Markets

Regulated

Latest News

The Debt-Reduction Playbook: Can Today's Governments Learn From The Past?

WikiFX
2025-11-16 20:50

Trillium Financial Broker Exposed: Top Reasons Why Traders are Losing Trust Here

WikiFX
2025-11-17 20:04

FIBO Group Ltd Review 2025: Find out whether FIBO Group Is Legit or Scam?

WikiFX
2025-11-17 17:12

Amillex Withdrawal Problems

WikiFX
2025-11-17 18:24

Is INGOT Brokers Safe or Scam? Critical 2025 Safety Review & Red Flags

WikiFX
2025-11-17 17:24

150 Years Of Data Destroy Democrat Dogma On Tariffs: Fed Study Finds They Lower, Not Raise, Inflation

WikiFX
2025-11-17 19:55

CQG Partners with Webull Singapore to Power the Broker’s New Futures Trading Offering

WikiFX
2025-11-18 16:32

【WikiEXPO Global Expert Interviews】Ashish Kumar Singh: Building a Responsible and Interoperable Web3

WikiFX
2025-11-18 15:37

Trump: India\s US exports jump despite 50% tariffs as trade tensions ease

WikiFX
2025-11-18 07:24

IEXS Review 2025: A Complete Expert Analysis

WikiFX
2025-11-18 17:33

Rate Calc

USD
CNY
Current Rate: 0

Amount

USD

Available

CNY
Calculate

You may also like

COMOMERCEY

COMOMERCEY

TRANSGOLD MARKETS

TRANSGOLD MARKETS

TRADE ZONE MARKETS

TRADE ZONE MARKETS

SFXTRADEPRO

SFXTRADEPRO

MEGAWEALTH ASSETS MANAGEMENT

MEGAWEALTH ASSETS MANAGEMENT

Platinum Global Market

Platinum Global Market

TECHNICALEX

TECHNICALEX

PROFXTM

PROFXTM

MARATHON DIGITALFX

MARATHON DIGITALFX

SMART  TRADE SOLUTION

SMART TRADE SOLUTION