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Short covering

Volume Profile Analysis glossary · Profile Shapes & Distributions

Definition

Aggressive buying driven by short-position holders forced to exit, not by genuine new bullish conviction. Often produces P-shape profiles and ends with absorption at the highs.

Short covering in plain English

Short covering is buying that happens not because people are excited, but because people are trapped. A 'short seller' is someone who bet that a price would FALL; if it rises instead, they lose money every tick higher and eventually panic-buy to close the bet and stop the bleeding. That forced buying can rocket the price up fast — but it's fake fuel, because once the trapped sellers are out, the buying dries up and price often stalls right at the top.

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