When leveraged positions get force-closed, each forced sale pushes price further and triggers the next one, producing a violent move driven by mechanics rather than news. Those cascades routinely overshoot and retrace a good portion within the hour. You detect the cascade in real time from liquidation prints and a volume spike with no accompanying headline, then fade the short-dated up/down market that has repriced with it. The essential discipline is separating a mechanical flush from a genuine information event.
Markets on Polymarket where liquidation-cascade overshoot fade is the natural play:
