Long Liquidation...!!!

In our last post we saw that how short covering takes place

Now in this post we shall see that how long liquidation happens. 

Ideally long liquidation takes place when underlying asset is in uptrend but some consolidation takes place and at last due to lack of patience trader or holder of such position may exit. 

Please note volumes in derivative space is secondary aspect.  

Lets see first chart short covering has taken place. 

In above chart we can see long liquidation takes place with decrease in price and decrease in open interest. (click on image to see incase of any issue) 

Lower panel bars are open interest and not volumes. We can see that with consolidation for some time results into long liquidation and hence that results into open interest decrease. 

This is how long positions taken earlier are liquidated at later stage in slow or sudden move as the case may be. 

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Please note this blog post is for education purpose only. While utmost care is taken while writing this post but any human error cant be ruled out and we apologize for same in advance.