GlossaryIntermediate
Long Squeeze
A sharp price decline that forces leveraged long positions to be liquidated, with their forced selling accelerating the decline further.
A long squeeze is a sharp price decline that forces leveraged long positions (bets that price will rise) into liquidation, with the forced selling from those liquidations adding further downward pressure, accelerating the decline beyond what the initial move alone would have caused.
It's the directional mirror image of a short squeeze (see Kaavon's "Short Squeeze" glossary definition), which instead forces leveraged short positions to buy back into a rising market — both are specific instances of the broader liquidation cascade pattern (see Kaavon's "Liquidation Cascade" glossary definition).
Examples
- A long squeeze can turn an already-declining market into a much sharper crash, as liquidated long positions' forced selling compounds the original move.
- A long squeeze and a short squeeze are directional mirror images of the same underlying liquidation-cascade dynamic.