The profile shape is the map, not the forecast
In three separate tests, the shape label added nothing or almost nothing once the distances to the levels were known.
The question
Auction Market Theory names profile shapes: a session that has broken out of value, a double distribution with two balance areas and a thin gap between them, and others. Traders read them as forecasts. We asked whether the shape tells you which level price reaches first, beyond what the location of the levels already tells you.
What we did
Three separate tests. In each, a model that knew the shape was compared with the same model knowing only the distances to the levels and the time. Each situation was defined by a trader and checked by hand against real sessions before any test ran.
Result
In all three tests, the shape label added nothing or almost nothing.
- Outside value. In sessions shaped like a breakout, price outside value returned to the point of control a little more often than in other sessions (ES 41% vs 37%). Within groups of equal distance, the difference disappeared. These shapes simply leave price nearer the point of control.
- The shape condition on or off. A model's gain was about the same whether the shape condition was present or not. The effect we found belongs to the market, not to the shape.
- Between two balance areas. When price sits in the thin gap, the chance that it returns to the area it came from matches a simple random-walk formula built from the two distances almost exactly:
| Return to origin, fit years | ES | NQ | GC |
|---|---|---|---|
| Observed | 0.636 | 0.606 | 0.622 |
| Distance-only formula | 0.629 | 0.619 | 0.625 |
What it means
The shape tells you where the targets are: the points of control, the value edges, the gap. Once those are known, the label adds little to which one gets hit first. What moves the odds is where price sits on that map and what is happening at that price. See Volume pulls price toward it.
Limits
- Shapes were identified by fixed rules. Those rules matched a trader's own reading in most, not all, of the sessions checked by hand.
- This says the shape does not forecast which level first. It says nothing about how far price runs afterwards.
How these numbers are produced and compared: our method. Every change to this finding is dated in the research log. Historical results only; not a forecast and not a trading system. See the disclaimer.