For instance, let’s say currently OI is highest for Jan Futures and tomorrow OI is highest for Feb Futures, how will it affect the Jan future price?
there are four basic things to remember , (!) if there is increase in open interest and increase in price then it means long position are build on that stock (2) there is increase in open interest with decrease in price then it means shorts are build on that stock (3) if there is decrease in open interest and increase in price then it means short covering is happening on that stock, (4) if both open interest and price of the stock decreases then it means traders are unwinding there long position.These are four rules to be remember , although these are not correct all the time ( e.g. on a day long are build on a particular stock but on next day there is big selling in indexes or indexes are down due to global factors, these things are also to be keep in the mind while taking position instocks.
Rohan, the answer is Yes. Please refer the answer in an earlier query http://tradingqna.com/4500/how-data-and-volume-data-interprete-things-for-buying-selling?show=4500#q4500
Thanks for your answer, just to clarify, if you can explain the example in case the most active contract changes, what the effect on the price of previous active contract. (same example taken in the question)