How do you use the long/short ratio? Take $JCT as an example: the overall account long/short ratio is 0.47 (31.8% long / 68.2% short), compared with 0.46 an hour ago.
I usually look at it in three steps:
① Check for extremes: The ratio is already skewed. The side that’s heavily outnumbered is often caught out by a price wick;
② Check the change: More accounts are long than an hour ago;
③ Check for divergence: The price is up 136.56% over 24 hours, yet short positions still outnumber longs. Beware of a short squeeze.
Looking at volume, price action, and open interest together is more reliable than looking at sentiment alone.
#JCT
I usually look at it in three steps:
① Check for extremes: The ratio is already skewed. The side that’s heavily outnumbered is often caught out by a price wick;
② Check the change: More accounts are long than an hour ago;
③ Check for divergence: The price is up 136.56% over 24 hours, yet short positions still outnumber longs. Beware of a short squeeze.
Looking at volume, price action, and open interest together is more reliable than looking at sentiment alone.
#JCT