$XEC 15-minute contract open interest increased by 31.38%; the price rose 5.31% over the same period.
A beginner’s burning question: What does open interest actually tell us?
Open interest is not capital flow: an increase only means that the number of open positions in the contracts has grown. It can’t tell you whose capital is involved or which direction they’re betting on.
Rising prices with falling open interest are often seen as being driven by shorts closing their positions; falling prices with falling open interest are often seen as being driven by longs closing theirs. These are only interpretations, not conclusions.
The same reading can mean very different things in different market conditions, so don’t blindly apply a single rule.
A beginner’s burning question: What does open interest actually tell us?
Open interest is not capital flow: an increase only means that the number of open positions in the contracts has grown. It can’t tell you whose capital is involved or which direction they’re betting on.
Rising prices with falling open interest are often seen as being driven by shorts closing their positions; falling prices with falling open interest are often seen as being driven by longs closing theirs. These are only interpretations, not conclusions.
The same reading can mean very different things in different market conditions, so don’t blindly apply a single rule.