medium · Order Flow Analysis absorption-exhaustion-imbalance

What does a rising price accompanied by falling Open Interest (OI) typically indicate about a rally?

  1. New institutional buying is driving the move.
  2. Demand is perfectly meeting supply at higher prices.
  3. The market is in a long-term accumulation phase.
  4. The rally is driven by short covering (trapped traders exiting) and is likely unsustainable.

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