hard · Volume Profile Analysis profile-shapes
Two consecutive normal-distribution (D-shaped) sessions both have well-developed value areas. Session 2's value area is wider and its point of control sits a full tick-band higher than Session 1's, yet Session 2's RANGE is narrower than Session 1's. A pure range trader sees the narrower range as contraction.
What is the more rigorous interpretation of this combination?
- Narrower range with a wider value area and an upward-shifted POC indicates the auction spent more time accepting higher prices with less exploratory excess — efficient acceptance and a higher balance, more constructive than a simple range contraction.
- A wider value area always means rising volatility, so the narrower range is a data artifact and Session 2 should be treated as an expansion day with a higher POC confirming a breakout.
- Because the range contracted, value-area width is irrelevant; the higher POC is noise and the market is coiling for a move whose direction the profile cannot inform.
- The narrower range proves rejection of the higher POC, so the wider value area reflects failed auctions and Session 2 is distribution at the highs ahead of a reversal.
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