this article written by Jim Wyckoffforeigner said:Sakib, Im only going by what Ive learned from Alexander Elder (you can find his stuff for free online) as you can see from the post above, its more of a hindrance than a help.
There are definitely more accurate and timely tools.
Here's a difference in open interest, as opposed to volume: Open interest has seasonal tendencies--higher at some times of the year and lower at some times of the year, in many markets. The seasonal average of the open interest is important in analyzing open interest figures. If prices are rising in an uptrend and total open interest is increasing more than its seasonal average (5-year average), new money is considered to be flowing into the market, indicating aggressive new buying, and that is bullish.
However, if prices are rising and open interest is falling by more than its seasonal average, the rally is being caused by the holders of losing short positions liquidating (short covering) and money is leaving the market. This is usually bearish, as the rally will likely fizzle.
The same holds true in a downtrend. Open interest increasing more than its seasonal average on the downmove means new aggressive sellers entering the market, and this is bearish. But if open interest is declining more than the seasonal average on the downmove, then it's likely holders of long positions are liquidating their losing trades (long liquidation), and that the downtrend may be near an end.
Here are two more rules for open interest:
Very high open interest at market tops can cause a steep and quick price downturn.
Open interest that is building up during a consolidation, or "basing" period, can strengthen the price breakout, when it happens.
i found this, trying to figured out open interest and also trying Larry williams seminar - How I Made One Million Dollars ... Last Year ... Trading Commodities