Interpreting changes in Open Interest alongside price movements on FYERS charts is crucial for a deep understanding of market dynamics. Here’s a brief guide:
Increasing OI with Increasing Prices (Long Buildup): This scenario suggests a strong bullish trend where more traders are initiating long positions, anticipating further price increases.
Increasing OI with Decreasing Prices (Short Buildup): This indicates a bearish outlook where more traders are entering short positions, expecting prices to fall further.
Decreasing OI with Increasing Prices (Short Covering): This typically indicates a bullish reversal or rally, as traders close their short positions, driving prices upwards.
Decreasing OI with Decreasing Prices (Long Unwinding): This suggests a bearish reversal, with traders closing their long positions, leading to a drop in prices.