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Price, Volume & Open Interest Relation and How to Identify Trend & Reversal | Price Volume Analysis - YouTube
Channel: Learning Markets With Manish
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Like we keep trying to upload a learning video every weekend,
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so today also I am going to upload a video.
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Basically what this will be is, our regular viewers will know
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that many times selling pressure of which sector can come,
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you should book here reversal is possible,
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this I have told many times and mostly it has been accurate
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so many people ask sir how do you do it?
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Look, I will now try to teach, but these things, by watching the screen,
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take 6-7 years to understand. Because the coming generation is very smart,
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what we used to learn in 5-6 years, the new generation can learn in 1-2 years.
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So your learning curve will be fast but you will have to give time, right?
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So now what we are going to discuss with Price and Volume,
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can the market show the trend? Yes, it can show.
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We have to judge by seeing that. Plus,
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can we judge direction with price & open interest?
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Or can we judge trend reversal? Yes, we can.
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Momentum is going, will it continue? Can we judge this? Yes, we can.
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This entire thing I will try to explain.
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How can you do it in stocks? How can you do it in nifty, bank nifty?
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I will try to explain all this
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and we are talking about futures because options is a hedging instrument,
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yes, we are using it for trading, I mean
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maximum viewers are trading through options,
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but option is technically and fundamentally a hedging instrument.
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Trading instrument is future, on that I will discuss and try to explain you.
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From the OI change of future what trend you can know, and
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if you want you can use it in cash segment also,
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you can use it in futures and you can use it in options also.
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But the more you learn the more it will be beneficial to you.
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And if you like our effort, then like the video.
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Let's start our discussion.
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Look, first thing, price and volume. Okay?
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Take a screenshot of this and save it or write it somewhere.
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What trend is indicated.
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If price is increasing and volume is also increasing then signal is bullish.
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I will also show this to you on charts.
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Then after that is, if price is increasing, volume is falling
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means price is increasing, but volume is decreasing there, this means what?
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The bullish trend that was running can possibly be reversed.
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We will do its combination on open interest, we will come to that.
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But here first let's see price and volume.
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We'll do mastery on one thing, then we'll come to the second
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we'll improve slowly and with the combination of all
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when we utilized at last then we can take better trades, okay?
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After that price is decreasing, volume is increasing, means what is happening?
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price is falling and volume is increasing, this means what?
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More selling positions are adding, right?
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Volume adding means what? Selling pressure, more people are making fresh short.
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What does this mean? Trend is bearish.
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But suppose price is falling, trend of price appears bearish, but
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volume is falling, means what? Now people's interest is slowly reducing,
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fresh shorting is not happening.
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That is what we will call bearish trend reversal.
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So there we will get a signal of possibility of reversal. Plus,
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add one thing, any study is not 100% accurate.
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since so many years, viewers may think that my accuracy is very high,
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but while taking a trade accuracy is very less, it is only 50-60%
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remaining 40% of the time who saves?
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Remaining 40% of the time stop loss saves.
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So we also are wrong in analysis, you may not see it, but we are wrong.
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So I am myself admitting that I do.
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So you try to understand that anyone can be wrong,
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with all these studies you will be right 60-70% of the time
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and because of being that right, the returns you will get,
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40% of the time you will have to give stop loss, it will not hamper you.
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So, price volume is done. Now let's come to price and open interest. Okay?
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Look, on price and open interest, you will not get direction, but
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whether that diretion can continue or not, that this will tell.
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Means, this bullish trend that we got,
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or we saw possibitlity of bullish trend reversal,
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who will give its confirmation? Open interest will give. Okay?
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Coming to open interest.
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So in open interest if price is increasing,
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and open interest is also increasing, this means what?
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Price is increasing in market and open interest is increasing means
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fresh contracts are added.
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When fresh contracts are added, means what? Longs are being added
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When price is increasing, I'll show all on the chart and
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using what indicators you can see in live market, that also I'll show. Okay?
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So try to understand, keep watching properly, you will definitely understand.
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And if you don't understand then watch 2-3 times,
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then you will definitely understand. And when you understand,
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if you will utilize this and get benefits in the market.
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And those who want to do on call basis, that we don't have anything.
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I am not a calls, etc. man. If you want to learn, tell me anything,
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I am ready to teach. But if you say that, sir give a call,
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that you are not going to get here.
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Then you are on the wrong channel, choose any other channel. Okay?
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Price increase, open interest increase means what? Long trades are adding.
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But if price is increasing and open interest is decreasing, this means what?
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Shorts are getting cut. Okay?
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Price is increasing and open interest is decreasing, this means what?
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Those who were already in shorts are squaring off their position.
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They are squaring off means what?
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They have fear that their losses may increase,
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so they are squaring off their position due to which what will happen?
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The momentum which is running can continue because to cover the shorts
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they will have to put buy order. Then what will happen?
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In volume, it will show in the buy side and volume will increase.
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And when that volume will increase, the short covering will increase
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and momentum will continue further.
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This way price and open interest,
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if price is decreasing and open interest is increasing, this means what?
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When price was falling and open interest was increasing,
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open interest increasing means what? More selling positions are added.
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So when more selling positions are added it means volume is also increasing.
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So price is increasing, volume is increasing, open interest is increasing,
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means all three are clearcut signal of bearish trend.
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Then comes, price is falling, but open interest is also falling, this means what?
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Many of the long positions are unwinding.
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When they will unwind, they will put sell orders. Right?
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Long were on the buy side, they will put sell orders,
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someone will come to buy them. So what will happen is
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volume will slowly generate signal that
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there a bearish pattern that was made, there volume is decreasing,
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open interest is also decreasing, means people's interest in slowly decreasing.
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So the short side trend that was running,
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according to price, volume & open interest
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it is possible that one momentum that was there,
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because of the long unwinding it will slightly increase.
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Why? Because the long side were unwinding, due to that what will happen?
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You will see little more selling pressure. So in this last thing,
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people get confused. But if you see this on chart, you will get more clarity.
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How will you get clarity? I will show you with an example of bank nifty.
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And this chart is of today, Friday, 24th December.
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Friday, 24th December. Down here you can see Friday, 24th December.
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Wait I'll make my video small. Yes, chart is of Friday, 24th December.
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Video may be published on 25th, so Merry Christmas to all.
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So you see when market opened here, these are volume candles.
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How will we put volume candles? This is ChartIQ,
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if anyone is using TradingView then you can add volume candles,
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so you will get volume candles there.
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So there you can see volume bars like this.
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These are volume candles, where are they seen?
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Come to display and select volume candles on candles,
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and come to strategies, add open interest. Okay?
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So now what do you have to see? Look price is falling,
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volume candles are so thick, right? Price is falling...
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We posted on our channel today at 11:30-11:35AM that
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now it is time to clear the position here. Why time has come? Look,
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down here also volumes are happening, volume candles are little thick,
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but see here volume is dried up.
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This means what? Volume started decreasing.
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From above the market price was coming down, but volume started decreasing.
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When it started decreasing it is a possible trend reversal. Okay?
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How is it a possible trend reversal? Why? Because look,
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open interest is also slowly decreasing here. This means what?
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Those who added shorts, they are now squaring off.
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Open interest falling means what? The shorts are now unwinding.
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Open interest, what we were now discussing, open interest decreased.
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Here it is,
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Shorts are covering. Okay? Means
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now market can move towards bullish momentum.
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Here open interest started decreasing...
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Open interest has become flat going towards here.
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Means there is no momentum of open interest here, but price is inceasing...
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Volume candles are becoming thicker.
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Here you see towards the end coming to this level price is at same level,
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open interest is running as it is, now what you have to see? Volume.
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Volume if you see, the green candles formed are very small, very thin.
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But red candles formed are strong, again formed strong. Right?
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This means what is price indication? There is a possible reversal here. Okay?
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This signal of possible reversal you get here, price starts coming down.
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So this way in the live market also it can be judged by watching this.
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Now you will say sir we can be wrong in this! Yes, you can be wrong also.
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6 out of 10 times you will be right, 4 times you will be wrong.
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4 times stop loss will save you and 6 times you will get a big target. Right?
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Reversal from here happened of how many points?
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Roughly a reversal of 300-400 points. And stop loss if you had to give,
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then how much you would give? 40-50 points? Not more than that? Okay?
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Now if you see here,
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here you see suddenly... This is of 23rd, okay?
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In 23rd if you see, suddenly here open interest started increasing.
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Here open interest started increasing.
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And there were many small volume candles here, after that
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it started increasing. Means price is increasing, volume is also increasing,
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thick candles are being made here.
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Where did this stop? It stopped here. When your open interest started falling,
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price also started falling and in candles volume started increasing. Right?
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That momentum is continued till when? Till morning it is continued,
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till today morning. Till 24th it is continued.
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So this way we get a signal that this type of trend can go on. Okay?
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This is first thing. Now let's come to stocks. How will we see in stocks?
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So before that I will show one thing,
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look in Stock Edge they update on the basis of day end that
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in which stock in futures, open interest has increased.
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Now like first source, its price increased very much
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and open interest also increased, means that momentum is adding on positive side.
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This way if suppose
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open interest has declined in only 1 stock in future.
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Now declined in only 1 stock means what? Open interest in this is decreasing,
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means what? If its trend is negative, then there are signs of reversal.
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So if someone wants to use Stock Edge then link is in the description,
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you can use their 1 month free subscription through our link.
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And try to use it and you will get help in stock options also. Okay?
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Now let's see a stock example of Reliance.
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We saw in bank nifty,
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same thing in nifty, now let's come to Reliance.
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If you see in Reliance, its trend is negative since few days, right?
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Its trend is negative since few days.
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You see from 2500 this is falling...
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Everyday what is happening? Price is falling down.
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While falling down volume is high, while falling down volume is high.
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Those who are regular viwers, at 2250 we had said that
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now here shorts should be cut.
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Now look how small volumes have happened there compared to other candles,
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quite small volumes have happened.
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After that again price came up, again see here quite small volumes have happened.
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And inspite of open interest clearly falling, this means what?
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those who are on short side are squaring off...
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See the open interest, lines keep falling...
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And when this price has come up whatever open interest was remaining,
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when it opened gap down on 24th,
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when it opened gap down on 24th, lot of this open interest got squared off.
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Now let's make this chart bigger and see the price action of the day.
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You may have noticed that for today we had discussed what levels? 2360, right?
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Now you see, it came below 2360, it came strongly below here,
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means open interest everyone started booking here. See this,
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little volume candles are formed, this means what? Price is coming down,
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and small volume candles are formed. Means reversal is possible.
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Reversal starts happening. Here market was taking halt, at 2360.
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But one signal was positive, open interest is increasing.
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Price is increasing, open interest is also increasing.
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So what we discussed here, price is increasing, open interest is also increasing,
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means more bullish trades are adding. Right?
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So more bullish trades are adding. So you see when it gave breakout of 2360,
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it gave a move of upto 2400.
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This way you can use it in the live market and see and take your decision.
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When volume reversal had to come, when did it happen?
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2-3 big volume candles were formed, after that small candles started forming,
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then see here small candles started forming, this means what?
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Now there are signs of reversal.
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And price gave reversal there.
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So this way it is used and accordingly judgement is taken,
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what we do and what we can predict in the live market,
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anyone can do it, provided your screentime experience is that much.
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If you liked the video then like it.
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