Prices are rising, yet the open interest is clearly declining. What does this mean? When prices rise while open interest decreases, it is usually a market driven by short covering (buying to close) that results from shorts being liquidated, rather than a large influx of new long positions.
Such a rally often lacks sustained momentum and is relatively “hollow.” If the open interest does not expand again afterward, prices are likely to fall once more. So the strength is in question—watch whether open interest keeps pace.
Such a rally often lacks sustained momentum and is relatively “hollow.” If the open interest does not expand again afterward, prices are likely to fall once more. So the strength is in question—watch whether open interest keeps pace.
