SPX6900, the high-flying meme coin, has been making waves with a stellar 15% surge on Monday, topping off an impressive 60% weekly gain.
But as the asset shows signs of exhaustion and trading activity slows, traders are speculating: is a short squeeze imminent, or are we looking at a correction?
Let’s break down the situation.
SPX6900 and the Short Squeeze Scenario
Current Market Dynamics
The SPX long/short ratio is at 0.58, indicating a majority of short positions. With many traders betting against the coin, a short squeeze—a forced buyback of short positions—could propel SPX6900’s price even higher.
However, cracks are appearing in the bullish narrative.
- Volume Drop: Trading volume has fallen by 12% to $93 million, signaling cooling investor activity.
- Price Dip: After peaking on Monday, SPX6900 has slipped 5.31%, raising questions about the coin’s momentum.
Technical Indicators: Signs of Exhaustion
Overbought RSI
On Monday, SPX6900’s Relative Strength Index (RSI) hit 80, deep in overbought territory. Typically, an RSI above 70 suggests that an asset may be due for a correction.
MACD Bearish Crossover
The MACD line on the 4-hour chart has fallen decisively below the signal line, a bearish signal indicating that selling pressure is overtaking buying momentum.
- Ascending Broadening Wedge: SPX6900 is trading within this pattern, with potential downside targets at the wedge’s lower boundary around $1.1342.
Price Targets and Possible Scenarios
Downside Potential
- Immediate Support: The 50-day SMA has provided reliable support and may cushion SPX6900 if the price corrects further.
- Lower Support: A drop to the $1.1342 level could materialize, representing a potential 10-20% decline from current prices.
Upside Potential
- Next Resistance: If SPX6900 bounces back, a push toward the wedge’s upper boundary at $1.90 is possible—a 35% gain from current levels.
Should You Expect a Short Squeeze?
While the short/long ratio suggests the potential for a short squeeze, several factors make this uncertain:
- Weaker Momentum: With declining volume and bearish signals like the MACD crossover, the likelihood of an immediate squeeze diminishes.
- Correction First?: A short-term correction could reset overbought conditions, paving the way for more sustainable gains.
SPX6900’s explosive growth has caught the market’s attention, but the coin now faces critical resistance.
Whether a short squeeze materializes or a correction sets in first, the asset’s trajectory will depend on how well it can consolidate and sustain buying interest.
For now, traders should watch key levels—$1.1342 as support and $1.90 as resistance—while keeping an eye on trading volumes and broader market sentiment.
