LSK is up 65.9% with MTL moving alongside it, a Layer 2 sector move, and funding says shorts are crowded.
Open interest on LSK fell over the same period, which points to shorts covering rather than new demand entering. Volume ran well above its 7 day average, and there is no matching news behind the move. This is a small-cap, so it can move fast in both directions.
A rally driven by short covering while open interest falls is different from one built on fresh buying. If open interest starts rising again alongside price, that would mean new demand is stepping in behind the squeeze. If it keeps falling as price stalls, the move loses its fuel once the shorts still on the board finish covering.
What would make this wrong: If open interest turns up while price keeps climbing, the short covering read was wrong and this was new demand all along.
Which move fades first, LSK or MTL?
Worth knowing: small-cap: moves fast, both ways.
The sizing images: a $10,000 demo account at 1% risk, long and short with the same stop, one typical daily move away. Both sides, because this is not a call.
Not advice.
Size a $LSK trade before you take one: https://creviacockpit.com/tools/risk-calculator?
Follow for the levels that matter, every day.
$LSK
#TradingPsychology #Crypto #CreviaCockpit | creviacockpit.com/lessons
Open interest on LSK fell over the same period, which points to shorts covering rather than new demand entering. Volume ran well above its 7 day average, and there is no matching news behind the move. This is a small-cap, so it can move fast in both directions.
A rally driven by short covering while open interest falls is different from one built on fresh buying. If open interest starts rising again alongside price, that would mean new demand is stepping in behind the squeeze. If it keeps falling as price stalls, the move loses its fuel once the shorts still on the board finish covering.
What would make this wrong: If open interest turns up while price keeps climbing, the short covering read was wrong and this was new demand all along.
Which move fades first, LSK or MTL?
Worth knowing: small-cap: moves fast, both ways.
The sizing images: a $10,000 demo account at 1% risk, long and short with the same stop, one typical daily move away. Both sides, because this is not a call.
Not advice.
Size a $LSK trade before you take one: https://creviacockpit.com/tools/risk-calculator?
Follow for the levels that matter, every day.
$LSK
#TradingPsychology #Crypto #CreviaCockpit | creviacockpit.com/lessons
