Dump (60s) + Long Liquidations → Long (Reversal / Reclaim)

Setup Idea

This is a disciplined “post-capitulation” long. A sharp dump combined with large long liquidations often means weak leverage has been flushed out. After such events, price frequently snaps back toward fair value.

The key principle: don’t catch the knife. We buy only after the market proves strength via a reclaim (regaining a key level) and/or holding VWAP.

What You Need on TradingView

Timeframes:

• 1m / 5m

Indicators:

• VWAP
• Volume
• RSI 14

Data:

• Open Interest (OI)
• Premium Index
• Long Liquidations (from your screener)

Conditions (Checklist)

Required

• Your screener triggers Dump (60s)
• Your screener triggers Liq Long (e.g., >$20k or your %OI threshold)
• Premium Index stabilizes or starts moving back toward 0 (the skew stops worsening)

Optional (Improves Quality)

• A clear “capitulation candle” with strong volume
• RSI14 is oversold and starts turning up (a plus)
• OI is not aggressively expanding into the sell-off (less downside pressure)

How to Enter Manually

Beginner rule: enter only after proof of strength (reclaim).

1. Mark the level that broke during the dump (range boundary / prior support)
2. Wait for a reclaim: price closes back above the level (ideal: 2 consecutive 1m closes)
3. Enter long:

• on the retest of the reclaimed level from above, or
• on the first pullback to VWAP, if VWAP has already been reclaimed and is holding

Invalidation (When the Setup Breaks)

• Price loses the reclaimed level and fails to recover it within 2–3 1m candles
• Price holds below VWAP (2–3 consecutive 1m closes)
• Premium Index starts deteriorating again while price remains weak

Take Profit (Short Targets, Matching Your Model)

• TP1: +1% (close 60–80%)
• TP2: +2% (close the remainder)
  Alternative: one take profit at +1.5%

Time Stop

If there’s no follow-through within 15–30 minutes, exit. This setup is built for a fast bounce, not holding for hours.

Common Beginner Mistakes

• Buying during the dump before reclaim (catching the knife)
• Ignoring VWAP and holding a long while price stays consistently below it
• Treating small liquidations as “capitulation”
• Trading isolated Premium Index spikes without structure and a level

30-Second Quick Checklist

• Dump triggered ✅
• Long liquidation spike ✅
• Premium stabilizes / moves toward 0 ✅
• Reclaim confirmed ✅
• Entry on retest / VWAP pullback ✅
  If any item is missing — skip the trade.

Funding Role (What’s OK vs. What’s Not)

For a post-dump long, funding can be a “tailwind” — but only if the market has already stopped falling and you are entering via reclaim/VWAP. We don’t buy because “funding is good.” We buy because price proved strength, and funding only improves expectancy.

OK for a Long

• Funding is near zero (neutral regime)
• Funding is negative (shorts pay longs) — a favorable backdrop for a bounce, especially if Premium Index has stopped worsening and is moving toward 0

Caution

• Funding is slightly positive, but you have a strong Liq Long event and a clean reclaim — the long is possible, but keep targets modest (TP1/TP2 by plan, no fantasies)

Not Recommended for a Long

• Funding is strongly positive (longs pay shorts) during/after the dump — often means longs are already crowded and price may keep grinding lower; the bounce can be weak and choppy
• Funding starts rising quickly into positive territory while price is still weak and Premium Index keeps deteriorating — a bad combination (longs are overpaying, but strength isn’t there)

Execution Examples

In progress — waiting for targets to hit.

Important

This setup does not work well when the entire market is selling off synchronously. In that environment, we avoid “early bounces” and instead wait for the final flushes — the clean “knife catches” at the very end — which are the highest-quality bounce opportunities.