Lesson / WY-02-12
Absorption describes limited directional displacement at a key area despite persistent aggressive pressure or substantial trading, indicating that the other side can take those transactions. When supply is absorbed, active selling finds it increasingly difficult to extend downward. When demand is absorbed, active buying finds it increasingly difficult to extend upward. What can be observed is the relationship between activity and result. Total volume alone cannot identify the absorbing party or its final position.
Course content is for learning and research only. It is not investment advice.
Read the Chapter ↗Timestamps
7 lessons · Chapter contents
01Tests: What Is Being Examined, and Where?↗02Supply Tests and Demand Tests↗03Absorption: Active Trading with Little Further Progress↗04Exhaustion: Declining Activity and Diminishing Progress↗05Assessing a Lack of Supply or Demand↗06Reactions and Follow-Through: Testing the Interpretation↗07Confirming Absorption and Exhaustion from Market Evidence↗Observe the market: start with context and place price within its structure.
Understand structure: compare supply and demand, and let evidence support or revise your hypothesis.
Form a view: define risk limits and know when to reassess.
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A Fresh Look at a Single Candlestick
Understanding Volume
