DERIVATIVE TRADING
1) ↑ PRICE ↑ VOLUME ↑ OPEN
INTEREST
AT THE TOP OR AT BOTTOM:
MARKET HAS LARGE NUMBER OF PEOPLE WITH BULLISH VIEW
AND WILLING TO CARRY LONG POSITIONS ,SO THE UPTREND
IS CONFIRMED & SECURE, SO CONTINUE LONG POSTION.----
BULLISH VIEW
2) ↑ PRICE ↑ VOLUME ↓ OPEN INTEREST
AT THE TOP : ( CLIMACTIC VOLUME)
MARKET HAS LOT OF TRADERS INITIALLY TRADING FROM
BOTH THE SIDES,BUT STRONG HANDS MAY BE CLOSING
PROFITABLE TRADES AT HIGHER PRICES AND MARKET WILL
HAVE LARGE PRICE SWAPS THROUGHOUT THE DAY AS
STRONG HANDS MAY PREPARE FOR SOME SHORTS AT
HIGHER PRICES CONSIDERING HIGH VOLUME DEMAND BY
WEAK HANDS, THIS CAUSES VOLUMES TO INCREASE
DISPROPORTIONATE TO THE OPEN INTEREST, SO WE MAY
SEE LESS OR NORMAL OR SLIGHTLY INCREASED OPEN
INTEREST, WITH A CLIMACTIC VOLUME.---BEARISH VIEW.
↑ PRICE ↑ VOLUME ↓ OPEN INTEREST
AT THE BOTTOM: ( CLIMACTIC VOLUME)
THE TREND PRIOR TO THE CURRENT TRADING DAY HAS
BEEN BEARISH, SUDDEN INCREASE IN PRICE & VOLUME
WITH DECREASE IN OPEN INTEREST DEPICTS STRONG
HANDS CLOSING THERE PROFITABLE TRADES AT LOWER
PRICES & INCREASE IN VOLUME SIGNIFIES STRONG HAND
ALSO CREATING SOME LONGS ADDING TO THE INCREASE IN
PRICE, OPEN INTEREST INITIALLY DECREASE A LOT ON
PROFIT BOOKING BUT MAY RISE ON NEW LONGS, SO WE
MAY SEE LESS OR NORMAL OR SLIGHTLY INCREASED OPEN
INTEREST, WITH A CLIMACTIC VOLUME.—BULLISH VIEW .
HAD THESE CONDITION SEEN WITH ↑ PRICE ↓ VOL & ↓ OI ONLY
PROFIT BOOKING IS THERE NO FRESH LONGS.--- BEARISH
TO NEUTRAL VIEW.
3) ↑ PRICE ↓ VOLUME ↑ OPEN INTEREST
AT THE TOP :
MARKET IS ATTRACTING LATE BUYERS AND EARLY
SHORTERS (BOTH WEAK HANDS) ,STRONG HANDS SITTING
ASIDE , SO HERE MARKET IS VULNERABLE FOR A SHARP
RETRACEMENT BUT VERY LIKELY THAT THIS SHARP
RETRACEMENT WILL BE BOUGHT AGAIN BY RE-ENTRY OF
STRONG HANDS AND BOTTOM POINT WILL BE CREATED FOR
A NEW UPTREND NOW( RETRACEMENT OF UPTREND)------
SO INITIALLY BEARISH THEN-BULLISH VIEW
(BULL MKT RETRACEMENT HAVE LOW VOLUMES)
↑ PRICE ↓ VOLUME ↑ OPEN INTEREST
AT THE BOTTOM:
INCREASE PRICE AND OPEN INTEREST AND NOT VOLUME
SIGNIFIES UNIDIRECTIONAL TREND SO FRESH BUYING SEEN
HERE, IF THERE HAD BEEN INCREASED VOLUME ALSO, IT
MEANS SHORT WERE COVERED INITIALLY AND ALSO FRESH
BUYING BUT HERE OI REMAINS SAME SO STRONG HANDS
SITTING ASIDE & TRADING LIMITED TO WEAK HANDS SEEN
SO MKT MAY MOVE UP ON LOW VOLUME BUT WILL FALL SO
INITIALLY BULLISH --THEN– BEARISH.
( BEAR MKT RALLIES HAVE LOW VOLUME)
4) ↑ PRICE ↓ VOLUME ↓ OPEN INTEREST
AT THE TOP :
PROFIT BOOKING AT THE TOP BY STRONG HAND WHO WERE
LONG AND WEAK HANDS ALSO CLOSING LOOSING
SHORTS,LESS NUMBER OF TRADERS READY TO CARRY
LONGS NOW ,SO THIS IS A WARNING SIGN OF A BEAR TREND
TO FOLLOW.-----BEARISH VIEW TO NEUTRAL
↑ PRICE ↓ VOLUME ↓ OPEN INTEREST
AT THE BOTTOM:
INCREASE IN PRICE AND DECREASE VOLUME SIGNIFIES
THAT SHORTS ARE BEING COVERED UNIDIRECTIONALLY BY
STRONG HANDS AND FURTHER SHORTING CAN NOW BE
DANGEROUS , AS FRESH UPTREND IS EXPECTED.---
BULLISH VIEW TO NEUTRAL
5) ↓ PRICE ↓ VOLUME ↓ OPEN INTEREST
AT THE TOP :
DECREASE IN ALL PRICE , VOLUME & OPEN INTEREST AT THE
TOP SIGNIFIES INDECESION BY STRONG HANDS WHO ARE
BOOKING SOME OR THERE LONGS BUT NOT ALL AT THE
EXPENSE OF SOME WEAK SHORTERS COVERING THEIR
SHORT UPSIDE, NEXT DAY CLOSE USUALLY MAKES THE
PICTURE CLEAR.---- INDECESION .
↓ PRICE ↓ VOLUME ↓ OPEN INTEREST
AT THE BOTTOM:
SOME WEAK TRADERS APPEAR BOOKING LOSS HERE AT THE
EXPENSE OF STRONG HANDS WHO WERE SHORT FROM THE
TOP BUYING, SO HIGH PROBABILITY OF MARKET TURNING
BULLISH .-----BULLISH VIEW.
6) ↓ PRICE ↓ VOLUME ↑ OPEN INTEREST
AT THE TOP :
FRESH SHORT POSTIONS ARE BEING CREATED AGAINST
THE CURRENT UPTREND SO THE CURRENT UPTREND IS IN
QUESTION WAIT FOR NEXT DAYS CLOSE BEFORE ANY
ACTION ----- INDECISION.
OR STRONG HANDS ARE CREATING FRESH SHORTS TO
BRING PRICES DOWN AND BUY CHEAP.----BEARISH THEN
BULLISH.
↓ PRICE ↓ VOLUME ↑ OPEN INTEREST
AT THE BOTTOM:
A FRESH SHARP RALLY AGAINST THE CURRENT DOWN
TREND IS DEVLOPING BUT AND SOME LONGS ARE BEING
MADE THIS PUTS THE CURRENT DOWNTREND IN QUESTION
SO WAIT TILL NEXT DAYS CLOSE. ----- INDECISION.
OR A STRONG HAND IS BUYING TO MARK PRICES UP AND HAVE
FRESH SHORTS ON UPPER SIDE.------ BULLISH THEN
BEARISH.
7) ↓ PRICE ↑ VOLUME ↓ OPEN INTEREST
AT THE TOP :( CLIMACTIC VOLUME)
THERE ARE SIGNS OF STRONG HANDS BOOKING PROFITS AT
HIGHS AND ALSO MAKING EQUAL OR FEW LESS SHORTS
BUT ALL THIS IS REFLECTED IN HIGH VOLUMES EVEN IF
OPEN INTEREST SAME OR LESS.-----BEARISH VIEW.
↓ PRICE ↑ VOLUME ↓ OPEN INTEREST
AT THE BOTTOM:( CLIMACTIC VOLUME)
PRICE & OPEN INTEREST IS DECREASING BUT VOLUMES
HIGH AS STRONG HANDS MAY HAVE COVERED SHORTS AND
CREATED SOME LONGS NOT TO BE REVEALED IN FORM OF
OPEN INTEREST,BUT HIGH VOLUMES ALWAYS TELLS THE
STORY.SO EXPECT BOTTOM.HERE PRICES SHOULD NOT FALL
MORE OR CLOSING SHOULD BE IN FORM OF DOJI ---
BULLISH VIEW. BUT IF PRICE FALL IS LARGE IT IS
INDECISION WAIT FOR THE NEXT DAY.
8)↓ PRICE ↑ VOLUME ↑ OPEN INTEREST
AT THE TOP :
TREND CHANGED LARGE NUMBER OF LONGS BOOKED AND
SHORTS CREATED SECURED DOWNTREND STARTS----
BEARISH VIEW. VOLUME INCREASE WILL BE MUCH
DISPROPORTIONATE TO OI INCREASE
↓ PRICE ↑ VOLUME ↑ OPEN INTEREST
AT THE BOTTOM:
BULLISH IF VOLUME INCREASE IS DISPROPORTIONATE TO
THE OI INCREASE AND CLOSING IS NOT MUCH NEGATIVE OR
DOJI.
ALWAYS REMEMBER
IF OPEN INTEREST FLATTENS AT THE TOP WITH DECREASED
VOLUMES----SIGN OF IMPENDING TOP WITH REVERSAL.
VERY HIGH INCREASE IN OPEN INTEREST AT THE TOP IS BEARISH
OR AT BOTTOM IS BULLISH .HERE IF THERE IS IA SUDDEN DROP IN
PRICE AT THE TOP,IT CAUSES WEAK LONGS TO LIQUIDATE FAST
CAUSING A SELF SPEEDING DOWNWARD SPIRAL.
BREAKOUT FROM A CONSOLIDATION RANGE WILL BE SIGNIFICANT
IF OPEN INTEREST RISES DURING CONSOLIDATION, AS AFTER THE
BREAKOUT WEAK SHORTS WILL BE COVERED RAPIDLY IN ADDITION
TO THE FRESH LONGS.
IF PRICE AND OPEN INTEREST DECREASE IN UPTREND ----CLOSING
OF LONGS BY DISCOURAGED TRADERS,AS LONG AS THIS TREND
CONTINUES TREND IS BEARISH.ONCE OPEN INTEREST STABILIZES
AT LOWER LEVELS & LIQUIDITY IS DECREASED ----BULLISH
REVERSAL.
