OI Analysis

Open interest is the total number of outstanding futures contracts that have not been settled. When OI rises, new money is entering the market. When OI falls, money is leaving.

The 4 Regimes

• Strong Trend (Price Up + OI Up): New money is entering and pushing price higher. This is the most bullish regime — the trend has conviction and is likely to continue.
• Short Covering (Price Up + OI Down): Price rises but OI falls — shorts are buying back their positions, not new longs entering. The rally may be temporary.
• Distribution (Price Down + OI Up): Price falls while new positions are being opened — new shorts are being established. This is bearish and suggests further downside.
• Capitulation (Price Down + OI Down): Both price and OI are falling — longs are liquidating. This often marks the final stage of a sell-off and can precede a bottom.

OI Percentile

Ranks current open interest within its 3-year range (0-100%). High percentile means OI is near historical highs — there's a lot of interest in this market.

Confirmation

Compares the OI regime with the COT contrarian signal. When they agree (e.g., Strong Trend + Bullish Signal), the setup is confirmed. When they conflict, exercise caution.