In short. Absorption is heavy aggressive volume at a price that does not move price: market buyers keep lifting the ask and the ask keeps refilling, so the footprint shows a large number on the ask side and a candle that fails to break higher. It means a passive participant is absorbing the aggression, often ahead of a reversal in the direction of the passive side.
Worked example on NQ: at a prior high, three candles print +400, +600, +350 delta and price gains four ticks in total. Buyers are paying the ask, sellers are resting at it, and the book keeps refilling. The trade is a short with a stop above the high once price prints a lower low.
Absorption is distinguished from exhaustion by who is in control: in absorption the passive side wins; in exhaustion the aggressive side simply runs out. The article 'Absorption vs exhaustion' on this site contrasts the two on the footprint, the DOM and the delta.
Questions traders ask
What is Absorption?
Absorption is heavy aggressive volume at a price that does not move price: market buyers keep lifting the ask and the ask keeps refilling, so the footprint shows a large number on the ask side and a candle that fails to break higher. It means a passive participant is absorbing the aggression, often ahead of a reversal in the direction of the passive side.