Exhaustion

The buying stopped because there was no more buying, not because someone stopped it. That distinction is easy to state and hard to observe, and this page is mostly about why.

A move runs. Then it stops. Two very different things can have happened:

• Someone was standing there and held it — that is absorption.
• Nobody was standing there and the move simply ran out of participants — that is exhaustion.

On the chart both end the same way: price stops going. That shared ending is why the two words get used interchangeably, and it is also why one of them is much harder to prove than the other.

Absorption leaves a trace. Exhaustion is an absence.

This is the whole difficulty, and it is worth stating plainly:

Absorption is something that happened. Exhaustion is something that stopped happening.

When resting size absorbs aggression, the absorption is made of trades. Every contract that got filled against the passive side printed on the tape. You can count it, you can see it stack up at one price, and you can compare it to how far price moved. That is a measurable footprint.

Exhaustion is the opposite shape. The orders that would have continued the move were never sent. There is no print for an order that did not arrive. What you actually observe is volume tapering off — and volume tapering off is consistent with several stories at once:

Only the first of those is exhaustion, and the tape does not tell you which one you are looking at. That is not a limitation of a particular tool — it is a property of the data. A print tells you what someone did. It cannot tell you what someone decided not to do.

Absorption vs exhaustion, side by side

The practical consequence: if you find yourself asking "was that absorption or exhaustion?" in real time, the honest answer is usually that you can establish the first and only suspect the second.

What OrderVane draws, and what it does not

OrderVane does not draw a mark called exhaustion. There is no exhaustion detector in any tier. That is a deliberate omission, not a gap we have not got to yet — we mark things the tape can show, and this one it cannot.

What we do draw bears on the question from a different angle, and it is worth knowing the difference between measuring something and labelling it:

• The tape meter puts effort and result on the same row. The left wing is how much traded at that price; the right wing is how quickly price passed through it. A row with a long effort wing and a short result is the classic shape people call absorption. A row where both wings are short near an extreme is the shape people read as a move losing participants — but the meter is reporting volume and time, not intent.

• Max and min delta in the bar statistics grid show how far delta swung inside the bar, not just where it closed. A bar that reached +400 on the way and closed at +30 spent its aggression and gave it back. That is a real, measurable fact about the bar. Whether the buyers were finished or merely interrupted is not in the number.

• The absorption mark is the case we will actually put a shape on, because replenished resting size leaves a trace in the volume-versus-range relationship.

So the honest workflow is the reverse of what the word suggests: you do not look for exhaustion, you rule out absorption. If size arrived and something held it, that is absorption and the chart will say so. If the move stopped and there is no such trace, you are left with an absence — and an absence is where inference starts, not where a mark should be drawn.

The single-print confusion

Two other things get called exhaustion and are not:

• A zero print — a row where one side printed nothing at all. That is a statement about one price level in one bar, not about the health of a move.
• An unfinished auction — a bar high or low where both sides were still trading when the bar closed. That describes how the auction ended, which is close to the topic but is a structural observation with a fixed definition, not a claim about who ran out.

Both are worth knowing precisely because they are the things you can define. Exhaustion, as normally used, is a story told about a definition-free absence.

Honest limits

• We do not mark it. No tier draws exhaustion. That is a decision about what the tape can support, not a feature we have not got round to.
• Fading volume is not evidence by itself. Every quiet stretch of a session has it.
• What follows is a different observation. If price reverses after a move fades, that reversal is data about the reversal. Using it to relabel the earlier bars as exhaustion is hindsight, and it is the fastest way to convince yourself of a pattern that was not visible at the time.
• Absorption is the observable neighbour. Where the tape can support a claim, we make one. Where it cannot, we would rather draw nothing than draw something that looks certain.

Related

• Absorption — the case that does leave a trace, and the three conditions a mark needs
• The tape meter — effort and result on the same row, at each price
• Per-bar statistics — including how far delta swung inside the bar
• Unfinished auction — how an auction ends, with a fixed definition
• Zero print — a row where one side printed nothing