Open Interest and Cycle
The concept of Open interest and cycle suggest that in a bullish cycle, long-unwinding phenomenon is just a pause in the overall bullish rally of the underlying. While in case of a bearish cycle, short covering rally, which is sometimes…
Observing this symbol wise isn’t a scalable technique and could be time consuming. There was a need to develop a bird’s eye view, where the price- open interest combination conditionalities are taken into account to give a subset of F&O stocks, which adhere to those properties/conditions and suggest the requisite trend.
Quantsapp team has developed an analytical tool, Built-up – Cycle which helps traders to scour through the entire database of NSE Open interest of F&O stocks to give the necessary subset which possess the characteristics specified in the parameters which could be a customised definition of a trend.
For example, if a lookback period of 20 days is taken and we wish to search for F&O stocks which possess a count of 14 long or long-unwinding open interest circumstances (L – LU). This would help filter the necessary F&O stocks.
One of the picks is ITC, which clearly is exhibiting a L-LU cycle, as evident from the market chart. There is only one short which is also a minor one in terms of OI, otherwise each dip in price was due to long unwinding and not creation of short positions. This is how the analytical tool of Quantsapp suggests different F&O stocks which satisfy the necessary cycle conditions.
https://web.quantsapp.com/built-up/cycle
If a lookback period of 20 days is taken and we wish to search for F&O stocks which possess a count of 14 short or short-covering instances (S - SC). This would help filter the necessary F&O stocks which could be in the Short – Short Covering cycle.
One of the picks in a bear cycle is COFORGE which clearly is exhibiting a S - SC cycle, as evident from the market chart. There are no longs and any minor pull backs are clearly indicated by Short Covering in this marked zone on the chart.
Frequently asked questions
What relationship shall OI and cycle have?
The concept of Open interest and cycle suggest that in a bullish cycle, long-unwinding phenomenon is just a pause in the overall bullish Long- Long unwinding cycle of the underlying. While in case of a bearish cycle, short covering rally, which is sometimes referred to as dead-cat bounce results is a pause in the overall scenario of falling prices.
How can the relationship between OI and cycle be studied for different F&O scrips, in one window or screen?
Quantsapp facilitates the study of cycles like long – long unwinding ( L- LU) and short – short covering (S – SC) in a scalable manner for different F&O scrips like Nifty, Banknifty and other stocks, via its built-up tool.
How can I study about the cycle a stock is in?
Quantsapp’s BUILT-UP tool enables traders to study a stock from the bullish/bearish cycle perspective, in a scalable and simple menu driven manner, for not just one stock, but all F&O stocks in one click.
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