Divergence between open interest and price generally falls into three categories. This time, $JCT saw open interest rise while the price fell (24-hour open interest +30.59%, price -40.84%):
· Rising open interest, flat price: Long and short positions are both growing, suggesting a buildup phase; volatility may increase later
▶ Rising open interest, falling price: Could indicate new shorts moving in; if short positions become too crowded, a rebound could catch them off guard
· Falling open interest, rising price: Often driven by short covering; whether the rally has staying power depends on whether new money follows through
Open interest is currently around $12.85 million. Is this an opportunity or a trap?
· Rising open interest, flat price: Long and short positions are both growing, suggesting a buildup phase; volatility may increase later
▶ Rising open interest, falling price: Could indicate new shorts moving in; if short positions become too crowded, a rebound could catch them off guard
· Falling open interest, rising price: Often driven by short covering; whether the rally has staying power depends on whether new money follows through
Open interest is currently around $12.85 million. Is this an opportunity or a trap?