Definition. A situation in which aggressive orders hit the passive side of the market, which absorbs them, and price doesn't move any further despite heavy volume.
How it works
Buyers (or sellers) trade at market, but on the other side there are limit orders that get replenished as they're filled. The aggression is “absorbed”.
Example
At an important level from the previous day, very heavy aggressive buying goes through for several minutes, yet price stands still. That's a sign of a large participant on the sell side.
What to watch out for
Absorption can end and the level can break. Its significance depends on location: at an important level it says more than in the middle of a range.
You'll find the full explanation with graphics, examples and exercises in the 🖥️ Order flow atlas space, and its use in the live market in the 🔴 Live Room. Both are available to Club members (in Polish).
