Predicting Market Next Move Using OI Charts in AOC

In this article I am going to explain a recent observation/strategy in Advance Option Chain that can be of great help during volatile market.

Basically the strategy involves big candles and OI chart as available in AOC using which we can predict whether market will continue to move further in the same direction of the big candle was just SL hunting and market would reverse from that.

Lets look at the strategy in details step by step.

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Step 1. Finding A Big Red or Green Candle

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General Rules for this Observation

Here are the rules summary for this observation/Stratergy

1. Identify big red or green candle.
2. On closing of the candle we look at the OI or OI Change graph of particular strike price where this candle was formed.
3. For big red candle, there will be drop in PE OI/OI Change (green line) and for Big green candle there will be drop in CE OI (red line).
4. If on red candle there is rise(spike) in CE OI (red line) this indicate market is most likely to continue further down side. If red line remains flat market is most likely to reverse from that level. If there is drop in CE (red line) market is very likely to recover rapidly very fast upside reversal is to be expected.
5. If on green candle there is rise(spike) in PE OI (green line) this indicates market is most likely to continue further up side. If green line remains flat market is most likely to reverse from that level. If there is drop in PE (green line) market is very likely to recover rapidly very fast reversal is to be expected in downside.