The signature
The classic bullish version: price at a meaningful level, a participation spike, a candle range that stays small or closes off its lows with a long lower tail, sellers pressed, the tape absorbed them, downside result near zero. The bearish mirror inverts it at highs. The core arithmetic is effort divided by result: when the denominator collapses despite a big numerator, absorption is the hypothesis.
Candidate, then confirmation
The trap: not every high-volume small-body candle is absorption; many are pauses before continuation, the wall stepping aside. So the state machine matters: flag the candidate, then require the market to prove it, a reclaim of the level, a structure shift, displacement away, within a reasonable window. No confirmation within a handful of candles and the candidate expires unmourned. Our Master Volume tool encodes exactly this candidate-confirm-expire cycle rather than shouting at every spike.
Where it matters most
Location multiplies meaning: absorption at a weekly zone after a liquidity sweep is the stuff of major turns; the same signature mid-range is usually inventory noise. Absorption reads are the volume half of a conversation whose other half is always structure, and neither half trades alone.
FAQ
How is absorption different from a rejection wick?
A wick shows the excursion failed; absorption specifically shows heavy effort producing that failure. Wick plus participation spike plus location is the full signature.
How long is an absorption candidate valid?
Until nearby price action confirms or contradicts it, typically within a dozen candles. Stale candidates expire; the label never lingers.
Can absorption fail?
Yes, walls get pulled or overwhelmed. That is exactly why the framework demands confirmation before the reading carries any trade weight.
ⓘ See these ideas on real price: open the free XAUUSD live chart.