medium · Volume Profile Analysis profile-shapes
Reviewing a 20-day composite volume profile for SPX, an analyst identifies the profile as having a pronounced P-shape: a well-developed upper distribution with POC at 5,240 and thin lower tail extending to 5,170. The prior 20 days the profile was a balanced single distribution centered at 5,195.
What does the shift from a single-distribution to a P-shape composite profile suggest about the evolving auction?
- The market has shifted from balanced to an upward-skewed auction; buyers are accepting higher value and the downside tail indicates failed lower probes
- The P-shape confirms that the market is in a bearish trend because the heavy upper volume indicates distribution by sellers
- The change from a single distribution to a P-shape means the prior 20-day POC at 5,195 has been permanently eliminated as a reference
- A P-shape composite profile over 20 days is too long a time frame to be meaningful for volume profile analysis
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