First off all Absorption is when Absorption happens when retail traders buy heavily at a key level, expecting a breakout. Institutions use those buy orders to sell into, trapping the retail traders as price quickly reverses against them and traps them.
Step 1: Mark Key Levels Identify important support/resistance zones where traders are likely to get trapped.
Step 2: Watch Price Approach As price nears your level, prepare to check order flow (Delta vs. candle).
Step 3: Spot Absorption Bullish absorption → Candle is bullish, but Delta is negative (sellers are aggressive, yet price still rises). Bearish absorption → Candle is bearish, but Delta is positive (buyers are aggressive, yet price still falls).
Step 4: Interpret the Trap This shows retail traders are stuck on the wrong side, while institutions quietly take the opposite side to build positions.
