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How to identify absorption in a market without using the dom?
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How to identify absorption in a market without using the dom?

  #1 (permalink)
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How to identify absorption in a market without using the dom?

Does anybody know a way how to see in a market when price will be absorpted without moving.
I tryed it with the dom (Ninjatrader) but i canīt see it. I know tools like jigsaw ... but i was wondering if there is another way?

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  #3 (permalink)
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Divergences in price vs. cumulative delta can be a good indicator for absorption. The idea being that large market orders move price with the direction of the aggressor, but if there is a large amount of aggressive trading but very little price movement there is a passive trader providing cheap liquidity to the aggressor/absorbing their orders.

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high volume low price movement - ask yourself why is it not moving?

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Delta Divergence


conorcoen View Post
Divergences in price vs. cumulative delta can be a good indicator for absorption. The idea being that large market orders move price with the direction of the aggressor, but if there is a large amount of aggressive trading but very little price movement there is a passive trader providing cheap liquidity to the aggressor/absorbing their orders.

I agree with you that using Delta Volume is a good way to identify absorption. Here is a 5 min ES chart from Friday, when the large down move was reversed at the low of day. This is one of my favourite reversal signals.

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Regards,

Dudley

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Delta Divergence


mrmuggins View Post
I agree with you that using Delta Volume is a good way to identify absorption. Here is a 5 min ES chart from Friday, when the large down move was reversed at the low of day. This is one of my favourite reversal signals.

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Regards,

Dudley

@mrmuggins Thanks for your infoīs! How do you detect the Delta Divergence? Do you use an indicator? And if yes here from futures.io (formerly BMT)?
Best
Axel

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fossil View Post
@mrmuggins Thanks for your infoīs! How do you detect the Delta Divergence? Do you use an indicator? And if yes here from futures.io (formerly BMT)?
Best
Axel

Delta divergence is where delta and price do not move together. So you could have delta moving up but price stays the same. This shows that people are buying but those orders are getting soaked up.

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So here delta makes a lower low but price is higher.
Im not really making much of it... if I saw it diverge massively like delta is hugely down with good volume
then that has my attention and we might have a reversal. Some stop hunts will show up as a delta divergece, price spikes above a level but immediately comes back down leaving a wick, but the delta is completely up, sometimes a flux of opposing market orders will leave a wick on delta too(I use 1 min charts to view events as these). But key is it spikes up and rejects with very high volume for it to be significant. Thats pretty much what I use delta for.

Understanding yourself is just as important as understanding markets.

Last edited by TickedOff; April 23rd, 2015 at 08:49 AM.
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