Short Covering...!!!!

In our last post we saw that how long positions are built

Now in this post we shall see that how short covering happens. 

Ideally short built-up happens with slow or gradual increase in prices or in consolidated moves with slow or above average increase in open interest but Short covering is quick

Please note volumes in derivative space is secondary aspect.  

Lets see first chart short covering has taken place. 

In above chart we can see short covering has taken place with rise in price and decrease in open interest. (click on image to see incase of any issue) 

Lower panel bars are open interest and not volumes. We can see that with sudden up-move in last 5 candles (with arrow mark) there is also normal to high decrease in open interest. 

This is how shorts built earlier and liquidated at later stage in sudden move. 

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Please note this blog post is for education purpose only. While utmost care is taken while writing this post but any human error cant be ruled out and we apologize for same in advance.