Absorption Volume

Volume Spread Analysis Glossary

A high-volume down-bar that closes below the previous bar on a wide spread but recovers to close at or near its high, indicating that professionals are absorbing supply at that level—either to fill institutional buy orders or because they are bullish for their own accounts. Typically appears during a decline or at the bottom of a trading range. The market may not reverse immediately; it often drifts sideways while the absorbed supply is digested. A subsequent low-volume test of the absorption area confirms that the buying was genuine and that the up-move is imminent.

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