interpreting put-call ratio

During up-move

1. put-call ratio much higher than 1.0

= continuation of the up-trend till the ratio comes down

2. put-call ratio slightly higher than 1.0

= approaching reversal

3. put-call ratio much lower than 1.0

= slowdown of up-trend or reversal on the cards

4. put-call ratio slightly lower than 1.0

= continuation of the up-trend till the ratio comes down or rises further.

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During down-move

1. put-call ratio much higher than 1.0

= a panic situation. not sustainable for long. slowdown of down-trend or reversal on the cards

2. put-call ratio slightly higher than 1.0

= continuation of the down-trend till the ratio comes down or goes up

3. put-call ratio much lower than 1.0

= continuation of the down-trend till the ratio goes up.

4. put-call ratio slightly lower than 1.0

= approaching reversal

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if you couple this information with change in open interest, the results can be amazing!