Identify Short cover rally and fresh buying rally

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Pabolu Swamy

New Member
#1
#1
Hi All,

I am new to stock market and would like to study charts for making trading decisions.

I would like someone to enlighten how to identify that a rally is due to Short-covering. How can we identify a rally is due to short-covering and a rally is due to fresh buying/long positions.
 
S

sumeetsj

Well-Known Member
#2
#2
Pabolu Swamy said:
Hi All,

I am new to stock market and would like to study charts for making trading decisions.

I would like someone to enlighten how to identify that a rally is due to Short-covering. How can we identify a rally is due to short-covering and a rally is due to fresh buying/long positions.
Click to expand...
Whenever,

Rise in Prices + Decrease in Open Interest --> Sort Covering
Rise in Prices + Rise in Open Interest --> Fresh Long positions
Fall in Prices + Decrease in Open Interest --> Profit booking
Fall in Prices + Rise in Open Interest --> Fresh shorting
 
P

Pabolu Swamy

New Member
#3
#3
Hi sumeetsj,

Thanks for the reply.

To understand your reply, I should first understand open interest.

Can you please enlighten me on open interest.

Also how do we plot open interest in MetaStock.
 
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