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How can "Open Positions" be used as a technical indicator?

Open positions is also known as Open Interest in the literature. Open interest is a statistic for a derivatives market that is simply the sum of all the open contracts. This is not my field, so I am reluctant to offer guidance, because I do this only for areas where I have some experience. There is some material in the subject notes for the SIA subject E114 Technical Analysis. However the notes can only be obtained if you do the subject. The best piece on analysing open interest that I have come across is by Forget Volume, Look Only at Open Interest By Earl Hadady in The Handbook of Technical Analysis edited by Darrell Jobman.

For a basic textbook, see John Murphy Technical Analysis of the Financial Markets, chapter 7.