Playbooks

What it is

Perpetual futures show how positioned the market is. Funding is what longs pay shorts (positive) or shorts pay longs (negative) to keep the perpetual near spot; open interest is how much is open. Together with price they describe crowding. They do not say which way price goes next.

What to look for

• The data. If a derivatives tool such as get_derivatives is available, read funding (current and its recent average) and open interest for the asset from it, with their times. If no such tool is available, say that funding and open interest are not available here, read the chart alone, and do not estimate them.
• Price and open interest together.
  • Price up, open interest up: new longs are opening; the move is being chased.
  • Price up, open interest down: shorts are closing; a squeeze rather than new demand.
  • Price down, open interest up: new shorts are opening.
  • Price down, open interest down: longs are closing; a flush.
• Funding extremes. Funding well above its own recent average means longs are crowded; well below means shorts are. Compare with the asset's own history, not a fixed number.
• Divergence. Price making a new high while open interest falls, or funding stays negative into a rally, says the move is not carried by new positions.

How to mark it

Funding and open interest are not prices, so they go in the answer. On the chart:

• marker on the candles where funding was extreme, labelled Funding+ or Funding-.
• zone kind liquidity above a crowded long's recent highs or below a crowded short's lows, where forced closes would sit.
• level for the price where open interest started its last build-up.

Scenario logic (analysis, not advice)

• Crowded and stretched: extreme funding with price far from its averages describes squeeze risk against the crowd. Say it as context.
• Healthy: rising price with rising open interest and funding near its average describes a move carried by new positions.
• Any scenario still needs the chart's own invalidation; derivatives data only adds context to it.

Invalidation

A crowding read ends when funding returns to its average or open interest resets after a large move. Say which.

Pitfalls

Funding can stay extreme for a long time in a strong trend. Open interest across venues is not one number; say which venue the data came from.