The Absorption and Reversal Setup

One order flow setup I'm interested in studying: absorption followed by a reversal.

Imagine NQ approaches a significant resistance level.

Aggressive buyers continue lifting offers, but price struggles to make further progress.

That may indicate sell-side absorption.

However, I wouldn't short simply because buying activity is high.

I would wait to see whether price rejects the area, returns below a relevant level, and provides a clear entry trigger.

The invalidation point should be defined before entering.

If buyers eventually push through resistance and price holds above it, the original short idea may no longer be valid.

Absorption is an observation, not a complete strategy. The subsequent price reaction is what makes the setup worth investigating.