Been looking into open interest lately and how it impacts my trades. Sometimes I see huge open interest numbers but prices still move against what I expected.
Does high open interest really mean strong support or resistance? Or am I reading this wrong?
Would be good to hear how others use this data in their trading decisions.
High open interest shows activity level. It does not indicate price direction. Focus on whether new positions are opened or existing ones are closed. Combine open interest with volume for analysis.
Combine volume and open interest for a clear picture. Volume helps spot trends.
Open interest can be complex. High open interest means many contracts exist but does not indicate direction.
It’s crucial to see how open interest changes with price movements. If prices break through a significant open interest level and the numbers drop, that may signal weakening support or resistance.
Using open interest mainly for confirmation is a practical approach.
Open interest shows you where everyone’s positioned, not where price is headed. When there’s huge open interest at a level and price blows right through it, that’s actually bullish - the move’s got legs. You make money when all those positions get squeezed.
Watch how open interest changes with price movement. Price up + open interest up = fresh buying. Price up + open interest down = short covering, which is weaker.
This video breaks down the basics:
Don’t overthink it. Use open interest to find where the crowd’s wrong, then fade them when they panic.
Been there. Early on, I thought heavy open interest guaranteed support levels would hold.
Got burned for $300 on GBP/USD because I trusted those numbers too much. Price smashed right through and I kept holding, expecting a bounce that never came.
Now I see open interest as a magnet - it’ll either hold price or snap hard when it breaks.