Aggressive Orders

 Understanding Aggressive Orders and Absorption with Green & Red Bubbles

Introduction

The Green and Red Bubble indicator identifies locations where aggressive market orders entered the market. These bubbles are not trading signals by themselves. Instead, they reveal where buyers or sellers were willing to cross the spread and trade aggressively.

The market's reaction after the bubble appears determines whether those aggressive traders successfully moved the market or whether they were absorbed by passive limit orders.

Understanding this relationship between aggressive orders and passive liquidity provides valuable insight into future support, resistance, and trade direction.

Aggressive Orders vs. Passive Orders

Every transaction requires both a buyer and a seller.

There are two types of participants:

Aggressive Orders (Market Orders)
- Cross the spread immediately.
- Lift the offer (buyers).
- Hit the bid (sellers).
- Create momentum.

Passive Orders (Limit Orders)
- Rest in the order book.
- Provide liquidity.
- Absorb incoming market orders.
- Often defend important price levels.

The battle between these two participants determines whether price continues or reverses.

Buying Absorption

A Green Bubble represents aggressive buying activity.
Aggressive buyers repeatedly lifted the offer, showing strong buying pressure.
What happens next determines the market's intention.

• Scenario 1 — Buying Continues (No Buying Absorption)
• If price successfully trades and closes above the Green Bubble, the aggressive buyers have overwhelmed any passive sellers.
• This means:
• - Buyers remain in control.
• - Passive sellers failed to absorb demand.
• - The Green Bubble becomes a potential support level.
• - Higher prices are expected.
• The aggressive buying successfully initiated a continuation move
• 
  
• Scenario 2 — Buying Absorption
• If price cannot trade above the Green Bubble and instead reverses lower, passive sellers have absorbed the aggressive buying.
• This indicates:
• - Large limit sell orders absorbed demand.
• - Buyers exhausted themselves.
• - The Green Bubble becomes a supply (resistance) level.
• - Price is likely to rotate lower.
• Aggressive buying failed to move the auction higher.
• 

Selling Absorption

A Red Bubble represents aggressive selling activity.
Aggressive sellers repeatedly hit the bid, showing strong selling pressure.
Again, price behavior after the bubble determines the outcome.

• Scenario 1 — Selling Continues (No Selling Absorption)
• If price successfully trades below the Red Bubble, aggressive sellers have overpowered passive buyers.
• This means:
• - Sellers remain in control.
• - Passive buyers failed to absorb supply.
• - The Red Bubble becomes a potential resistance level.
• - Lower prices are expected.
• The aggressive selling successfully initiated a continuation move.
• Scenario 2 — Selling Absorption
• If price cannot trade below the Red Bubble and instead reverses higher, passive buyers have absorbed the aggressive selling.
• This indicates:
• - Large limit buy orders absorbed supply.
• - Sellers became exhausted.
• - The Red Bubble becomes a support level.
• - Price is likely to move higher.
• Aggressive selling failed to move the auction lowe
• 
  

Bubble Interpretation

⭗⬤	Price Confirmation	Market Interpretation	Bubble Role
Green	⮙Price moves above bubble	Aggressive buyers successful (no buying absorption)	⮙Support
Green	⮛Price fails above bubble and reverses	Buying absorption by passive sellers	⮛Resistance
Red	⮛Price moves below bubble	Aggressive sellers successful (no selling absorption)	⮛Resistance during continuation
Red	⮙Price fails below bubble and reverses	Selling absorption by passive buyers	⮙Support

Trading Applications

The bubbles become important reference levels after the market confirms the outcome.

Long Trade Opportunities
Consider long positions when:

- Price trades above a Green Bubble, confirming aggressive buyers remain in control.
- Price trades above a Red Bubble after selling absorption has caused price to reverse upward.

These situations indicate that buyers have gained control of the auction.

Short Trade Opportunities
Consider short positions when:

- Price trades below a Green Bubble after buying absorption has rejected higher prices.
- Price trades below a Red Bubble, confirming aggressive sellers remain in control.

These situations indicate that sellers control the auction.

Key Principle

A bubble does not predict direction by itself.

It simply marks where aggressive traders entered the market.

The important question is:

Did those aggressive traders successfully move the market, or were they absorbed by passive liquidity?

The answer comes from price confirmation after the bubble forms.

By waiting for confirmation, traders can distinguish between:
- successful aggression that leads to trend continuation, and
- absorption that often precedes a reversal.

This simple distinction allows the Green and Red Bubble indicator to identify important support and resistance levels while providing objective confirmation of whether buyers or sellers have won the auction.