Let's boost your knowledge on chart patterns. Today we look at short squeezes ⬇️
contracts). It can also happen simply because traders manually close their positions to avoid even greater losses.
So, how do short sellers close their positions? They buy. This is why a short squeeze results in a sharp price spike. As short sellers close their positions, a cascading effect of buy orders adds more fuel to the fire. As such, a short squeeze is typically accompanied by an equivalent spike inHere’s something else to consider. The larger the short interest is, the easier it is to trap short sellers and force them to close their positions.
The opposite of a short squeeze is a long squeeze – though it’s less common. A long squeeze is a similar effect that happens when longs get trapped by cascading selling pressure, leading to a sharp downward price spike.A short squeeze happens when there is a sudden increase in buying pressure. If you’ve read our article about
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