Most retail traders only look at candles.
Green candle = bullish. Red candle = bearish.
But once you begin studying:
- Open Interest (OI)
- VWAP
- Volume Profile
- POC / VAH / VAL
- Session behavior
- Candle participation
…you start realizing the market is not random.
It’s an auction.
And the real edge comes from understanding:
Who is entering? Who is trapped? Where is value being accepted or rejected? Is leverage increasing or getting flushed out?
That’s where things start changing.
What Open Interest Actually Measures
Open Interest (OI) measures the total number of open leveraged contracts in the market.
In simple terms:
- Rising OI = more traders entering positions
- Falling OI = positions closing
That’s important because price alone does not tell the full story.
The relationship between price and OI tells you what type of move is happening.
The 4 Most Important OI Relationships
Price Up + OI Up
This usually means:
- new longs entering
- bullish positioning increasing
- leverage building with the move
This can support trend continuation.
Price Up + OI Down
This usually means:
- shorts are closing
- short squeeze behavior
- not necessarily aggressive new buying
This type of rally can fade quickly if new buyers do not step in.
Price Down + OI Up
This usually means:
- new shorts entering
- traders pressing downside
- bearish positioning increasing
However, this can also create future squeeze fuel if the market later reclaims value.
Price Down + OI Down
This usually means:
- long liquidation
- forced selling
- emotional exits
- leverage getting flushed from the system
These moves are often violent and can occur near local bottoms.
Why Volume Candles Matter
Most traders never notice the difference between:
- elongated candles and
- wide candles.
But there is a major distinction.
On TradingView volume candles:
- Wide candles = heavy participation
- Thin candles = weak participation
This changes how you interpret price movement.
Example
A massive candle moving aggressively upward but remaining relatively thin often means:
price moved through thin liquidity.
Not necessarily massive institutional buying.
That type of move is often:
- liquidity vacuum behavior
- stop cascades
- emotional positioning
- short squeezes
Meanwhile:
A large candle that is BOTH elongated and wide usually signals:
- real participation
- stronger conviction
- larger positioning entering the market
That distinction matters.
Understanding VWAP, POC, VAH, and VAL
VWAP
VWAP acts like institutional fair value.
When price:
- holds above VWAP = stronger structure
- fails below VWAP = weaker structure
Repeated VWAP rejections during a selloff often signal:
- sellers controlling value
- bearish continuation
POC (Point of Control)
The POC is the price where the most business occurred.
It acts like:
- a magnet
- fair value
- a balance zone
If price cannot reclaim POC:
- market may continue trending away from value.
If price reclaims and accepts above POC:
- higher value may be forming.
VAH and VAL
VAH = Value Area High VAL = Value Area Low
These represent the upper and lower boundaries of accepted value.
When price leaves value aggressively:
- imbalance exists
- trend continuation becomes possible.
That’s why many vertical BTC moves retrace violently later.
When price rotates inside value:
- market is balanced
- chop and mean reversion dominate.
VWAP. POC. VAH. VAL. OI. Funding.
Reading Yesterday’s BTC Selloff
The recent BTC selloff was not random.
Structurally, the market:
- Lost higher value acceptance
- Failed VWAP reclaim attempts
- Lost POC support
- Accelerated through thin liquidity
- Triggered liquidation behavior
- Eventually stabilized near lower value
The key insight:
The move lower looked more like a liquidity vacuum and long liquidation than massive institutional distribution.
That distinction matters because:
- liquidation events can reverse aggressively
- true distribution often behaves differently.
Reading The NY Session Reclaim
During the NY reclaim:
- price reclaimed VWAP
- price reclaimed value
- POC was regained
- OI expanded with price
- candle participation improved
That suggested:
new positioning was entering during the rally.
Not just shorts closing.
However, once OI begins rising aggressively while price stalls:
- crowded positioning may form
- squeeze vulnerability increases
- trap conditions become possible.
That is why context matters.
The Real Goal
Most traders try to predict price.
Professional traders focus on:
- positioning
- liquidity
- value migration
- leverage behavior
- acceptance vs rejection
The goal is not simply asking:
“Is BTC bullish or bearish?”
The better question is:
“Who is trapped right now?”
Because trapped traders create volatility.
And volatility creates opportunity.
My Current Trading Framework
The framework I personally focus on combines:
- VWAP
- Volume Profile
- POC / VAH / VAL
- Open Interest
- Funding
- Session Timing
- Liquidity Sweeps
- Candle Participation
This allows me to distinguish between:
- real acceptance
- emotional expansion
- liquidation cascades
- weak squeezes
- healthy continuation
- trap behavior
That’s when the market stops feeling random.
And starts feeling structured.
Final Thought
The market is not just candles.
It is:
- positioning
- leverage
- liquidity
- value
- emotion
- forced behavior
Once you begin reading:
- OI
- VWAP
- POC
- volume participation
- value acceptance
…you stop reacting emotionally to price.
And start understanding the auction underneath it.
Call To Action
If you want deeper breakdowns on:
- Bitcoin market structure
- Open Interest
- liquidity sweeps
- VWAP trading
- institutional positioning
- and real-time BTC execution frameworks
Join me every Thursday night for the live masterclass.
And if you’re serious about leveling up your trading framework, join the inner circle and Discord community where we break this down in real time.
Built Not Bought.
- CJ Peart