Long vs Short Liquidations
Long liquidations are forced closures caused by price falling against long positions. Short liquidations are forced closures caused by price rising against short positions.
When one side spikes, stop-like flow has concentrated in that direction. Right after the spike, both a bounce and continuation are possible, so confirm volume and OI change.
What to Check After Liquidations
If OI falls after a large liquidation event, positions were likely flushed. If OI quickly rebuilds, check whether new leverage is entering again.
If CVD continues in the liquidation direction, trend pressure may still be strong. If CVD reverses, short-term absorption or mean reversion becomes worth checking.
Cautions
Liquidation data is affected by exchange coverage and reporting latency. Drawing a market-wide conclusion from one exchange can exaggerate the signal.
Liquidations are an outcome that already happened. They do not guarantee the next direction, so read them with support/resistance, news, and broad risk appetite.