Profile shapes (P, b, D and B)

What it is

The shape of a finished profile is a quick read of the session. A D-shape (a bulge in the middle, thin at both ends) is a balanced, rotational session. A P-shape (fat at the top, a thin tail below) often comes from short covering: a rally that then stalled and built value at the highs. A b-shape (fat at the bottom, thin above) is the reverse, often long liquidation.

A B-shape, or double distribution, has two bulges with a thin area between them: the market built value in one place, moved, and built value again. A long, thin profile with no real bulge is a trend session.

How to spot it

• Look at the profile only once the session is over; during it, the shape is still changing.
• Compare where the bulge is with where the session opened.

How to use it

• After a P- or b-shape caused by covering or liquidation, be careful assuming a new trend; it may be one side getting out rather than new buyers or sellers arriving.
• In a double distribution, the thin area between the two bulges is a level to watch the next day.

Common mistakes

• Reading a shape halfway through the session.
• Treating the shapes as signals rather than a description of what happened.

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