| may | | | | june | | | | july | | |
| spot | next | | | spot | next | | | spot | next | |
31/5 | 0 | 14466 | 14466 | 30/6 | 0 | 14449 | 14449 | 30/7 | | | |
27/5 | 14250 | 12604 | 26854 | 29/6 | 8920 | 13322 | 22242 | 29/7 | | | |
26/5 | 18642 | 8662 | 27304 | 28/6 | 10783 | 9240 | 20023 | 28/7 | | | |
25/5 | 20135 | 5331 | 25466 | 25/6 | 14523 | 6517 | 21040 | 27/7 | | | |
24/5 | 20059 | 3277 | 22336 | 24/6 | 16443 | 2483 | 18926 | 26/7 | 21304 | 5077 | 26381 |
21/5 | 20251 | 2301 | 22552 | 23/6 | 16946 | 1304 | 18250 | 23/7 | 19580 | 2110 | 21690 |
20/5 | 20866 | 2061 | 22927 | 22/6 | 19890 | 1055 | 20945 | 22/7 | 19539 | 1600 | 21139 |
As a futures technical trader, we are studying the market in 3 aspects which includes price, volume and open interest. Out of these 3, price is most important, however, volume and open interest did provide another confirmation on the price action and indication of changes of trend. By studying volume and open interest, it can serve as an alarm when we are too comfortable in riding the trend.
I am quite particular on open interest of our market because with the massive increase in open interest, the market only able to move significantly in 1 direction rather than in range. On
According to “Trading for a Living” from Elder Alexander, when open interest increase during a rally, it confirms the uptrend and give signal that it is safe to add long positions due to more sellers are coming into the market. When sellers can’t withstand the pressure of their losing position become wider and wider, soon they will close their position and their short covering is likely to push the price higher. Until a point where open interest goes flat during a rally, it warns the uptrend is getting old and best gains have been made and it is advisable to avoid go in any long position. When open interest falls during a rally, it shows both winners and losers are getting profit and cutting losses respectively, and the uptrend is ready reverse so it is time to goes short. In addition, when open interest increase during a trading range, it is a bearish sign because commercial hedgers and savvy institutions are more likely to sell short than speculators and making the prices couldn’t go up.
So our market was in the 1st situation or 4th situation? It is too bad that I don’t have any data to doiback testing on connection between prices and open interest, or else I can obtain another useful tool in identifying the market direction. So now our market was moving between 1350 and 1360, and it is still safe for long position as long our cash market didn’t close below 1350.
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