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Absorption and imbalance

Lesson 8 of 9, advanced, about 2 minutes.

The most informative moments in order flow are often the ones where a lot happens and the price doesn't change.

Absorption

When heavy taker selling meets a level and price doesn't fall, someone is on the other side taking all of it. Delta plunges, price holds. That's absorption, and it often marks a level that matters. It can also fail: once the buyer stops, the level gives way quickly.

Icebergs

An iceberg order shows only a small part of its full size. On the book you see 1 BTC at a price; on the tape you see 50 BTC trade there. Trades that keep printing at a price while the displayed size barely shrinks suggest that a larger order is hiding behind it.

Imbalance

Order-book imbalance compares the size resting on the bid side with the size on the ask side, close to the mid-price. A strong bid-side tilt can precede small upticks, but the signal is short-lived, and it is sensitive to the spoofing and pulling you met in the last lesson.

Try it on live data

Check yourself

Answer all 3 to finish the lesson.

1. Heavy selling meets a level and price holds. What is this called?
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Absorption. Resting buyers are taking all the selling without letting price fall.

2. 50 BTC prints at a price showing only 1 BTC resting. What is likely?
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An iceberg order. A hidden order keeps refilling the visible size.

3. Why is book imbalance a short-lived signal?
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Orders can be pulled or added instantly. Resting orders change constantly, so imbalance decays quickly and can be faked.