Liquidation Cascades:
When large numbers of traders have their stop-losses or liquidation levels near the same price (e.g., a support or resistance level), a cascade effect can occur. This can trigger rapid price moves as positions are liquidated.
Benefit from the Liquidation Zones:
Short Squeeze: If a market is heavily short and the price rises quickly, liquidations of short positions can fuel further upward movement.
Long Squeeze: Conversely, if the market is long-heavy and price drops, liquidations of long positions can accelerate the downward trend.
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