@jacquelineworoo
Open interest reflects the number of active derivative contracts, and divergence from price trends reveals market positioning. If open interest rises while prices fall, it may suggest increased short selling or hedging activity. Conversely, rising prices with declining open interest can indicate short covering rather than new long positions, making rallies fragile. Traders monitor this divergence to gauge whether momentum is driven by fresh capital or merely liquidation dynamics. Sustained alignment between rising open interest and price typically signals stronger trends, while divergence often precedes reversals, offering valuable insight into the underlying strength of market moves.
0 reply
0 recast
0 reaction