Home -
Brokers -
Main body -

WikiFX Express

Exness
EC markets
XM
TMGM
FXTM
FOREX.com
AVATRADE
IC Markets Global
FXCM
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
5-10 years | Regulated in Cyprus | Market Maker (MM) | MT4 Full License
Score
6.24

Read more

XBTFX Exposed: Do Traders Witness Withdrawal Denials & Poor Customer Support Service?

Do you constantly witness withdrawal denials or delays by XBTFX, an Antigua and Barbuda-based forex broker? Have you been constantly unsuccessful when transferring funds from your forex trading account to your wallet? Did you have to pay a charge on a funds transfer to your wallet? Did you witness withdrawal blocks even after paying the transfer fee? Such has been the story for many traders at XBTFX. Read on as we share the XBTFX review, containing traders’ complaints.

Original 2025-12-09 18:55

Classic Global Ltd Review 2025: A Complete Look at Its Services and Warning Signs

Classic Global Ltd says it is an online forex and CFD broker that offers many trading products to users worldwide. Its website looks modern, gives access to the popular MetaTrader 5 platform, and offers different account types. However, when we look deeper, we find serious questions about how this company really operates. There is a big difference between what the broker claims and what our research shows. We found major concerns about whether it follows regulations, its business history, and what users say about it. This paints a worrying picture for people thinking about investing. This Classic Global Ltd review aims to give you a complete and fair overview, breaking down what the broker offers and showing you the critical warning signs. Our goal is to give traders the information they need to understand all the risks that come with Classic Global Ltd.

Original 2025-12-09 17:44

Can You Trust Tauro Markets? A Complete Guide for New Traders

When picking a broker, the first question is always: Can you trust Tauro Markets? Is Tauro Markets reliable? For any trader, keeping your money safe is the most important thing, even more important than talking about fees, trading platforms, or what you can trade. A broker's trustworthiness isn't demonstrated by their advertisements, but by their actual licenses and their transparency about their business. The most important factor in determining whether you can trust a broker is whether they are properly regulated. This one thing decides whether your money is protected, whether you can get legal help if there's a problem, and whether the broker follows international rules for fairness and financial safety. This review will look closely at Tauro Markets' regulation, company history, trading conditions, and how they operate. We will study the facts to give you a clear, evidence-based answer about whether they're reliable for traders in 2025.

Original 2025-12-09 17:26

umarkets Exposed: Explore Complaints on Fund Scams, Withdrawal Denials & Fund Transfer Issues

Does umarkets ask you to pay an additional fee for withdrawal access? Is your trading experience with umarkets full of losses?Struggling to transfer funds from your forex trading account? Have you had to face manipulated fees and reduced payouts? Does the customer support team fail to address your trading queries? These trading issues have become increasingly common for traders here. In this umarkets review article, we have shared multiple complaints against the broker. Take a look!

Original 2025-12-08 19:43

WikiFX Express

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

WikiFX Broker

FXTM

FXTM

Regulated
ATFX

ATFX

Regulated
EBC

EBC

Regulated
TMGM

TMGM

Regulated
Exness

Exness

Regulated
GTCFX

GTCFX

Regulated
FXTM

FXTM

Regulated
ATFX

ATFX

Regulated
EBC

EBC

Regulated
TMGM

TMGM

Regulated
Exness

Exness

Regulated
GTCFX

GTCFX

Regulated

WikiFX Broker

FXTM

FXTM

Regulated
ATFX

ATFX

Regulated
EBC

EBC

Regulated
TMGM

TMGM

Regulated
Exness

Exness

Regulated
GTCFX

GTCFX

Regulated
FXTM

FXTM

Regulated
ATFX

ATFX

Regulated
EBC

EBC

Regulated
TMGM

TMGM

Regulated
Exness

Exness

Regulated
GTCFX

GTCFX

Regulated

Latest News

The "Arbitrage" Accusation: How Winning Trades Turn Into Account Reviews at ACY Securities

WikiFX
2025-12-08 12:28

IC Markets Formula 1 Partnership Debuts at Abu Dhabi GP 2025

WikiFX
2025-12-08 18:11

The TikTok Scam That Cost a Retiree Nearly RM470,000

WikiFX
2025-12-08 17:31

QuickTrade Review: Multiple Reports of Account Freezes and Login Failures by Users

WikiFX
2025-12-08 17:08

Is Tauro Markets Safe? A 2025 Deep Look into Its Risks and Openness

WikiFX
2025-12-08 17:26

CommSec Regulation, Login Information & User Review : A Comprehensive Review

WikiFX
2025-12-09 17:47

Trading Knowledge is Wealth! Take the Daily Quiz Challenge and Win 1,000 Points!

WikiFX
2025-12-09 15:01

FCA Waning list of Unauthorised firms

WikiFX
2025-12-09 19:42

Can You Trust Tauro Markets? A Complete Guide for New Traders

WikiFX
2025-12-09 17:26

FCA’s 2027 Compliance Overhaul: A New Reality for FX and CFD Brokers

WikiFX
2025-12-09 18:20

Rate Calc

USD
CNY
Current Rate: 0

Amount

USD

Available

CNY
Calculate

You may also like

RIAINTERESTS

RIAINTERESTS

Reserve Tech

Reserve Tech

PLANERABIT

PLANERABIT

CFDxchange

CFDxchange

BetterShield Asset

BetterShield Asset

XLITETRADINGPLATFORM

XLITETRADINGPLATFORM

MINERS PROFIT

MINERS PROFIT

SOFII-INVEST

SOFII-INVEST

Capexion

Capexion

Trade Lives Trade

Trade Lives Trade