ZEC surges 22% in a single day: the on-chain short squeeze and the bullish momentum behind it

Technical Warning: Overbought Signals Frequently Appearing

ZEC’s current rally is indeed not simple. From a technical perspective, the current trend has entered overbought territory, with risks and opportunities coexisting. On the 1-hour chart, the price is continuously pushing up along the moving averages, with a clear MACD golden cross signal, but both RSI and MFI are entering the “overbought zone,” indicating that the rally has gone too far and may face a correction pressure at any time.

The area around 600-660 is a strong resistance level, making it difficult to break through; below, the key support lines are at 452 and 400. If the price falls to these levels, it is highly likely to trigger a rebound. On the daily chart, the moving average support is firmly holding around 420, which is very important for the bulls.

On-Chain Data: Main Players Are Playing a “Psychological War”

The most noteworthy data comes from the on-chain metrics — ZEC’s largest short position, with an unrealized loss of 113%, has unexpectedly increased its position to 20 million USD in an extreme situation. This is not simply “bearish,” but a chip game among big players. The bullish side appears unusually calm, continuing to buy with 3x leverage, with unrealized profits already reaching 6.5 million USD.

The core logic behind this phenomenon: major players usually are not scared off by small losses but manipulate the market rhythm with large positions. The goal is to guide retail investor sentiment and create market volatility. Although the shorts are showing paper losses, this bet is likely based on a long-term expectation that ZEC will rise sharply and then inevitably fall back.

Price Trend and Entry Strategy

The current market shows typical “breakout after consolidation” characteristics. Horizontal consolidation is a normal adjustment process, and after completing the consolidation, a new trend is likely to emerge.

For traders holding long positions, as long as the price stays above the key support at 525, they can continue to hold; if holding short positions, they should also observe whether the 525 support is effectively broken.

For those still observing, they can build positions in batches: a light long position opportunity appears during the pullback around 530-525; if aiming for a rebound, they can also consider lightly shorting around 610-580.

Risk Management Is Key

Regardless of the strategy, setting stop-loss and take-profit levels is the bottom line to protect capital. The current market has many variables, and single trades should not carry excessive risk. Keeping sufficient trading ammunition is essential to respond to sudden market moves.

ZEC’s recent rally shows strength both technically and in capital flow, but overbought warnings are also emerging. In the short term, the moving average support around 420-420 remains solid, and the medium-term trend still leans bullish, but close monitoring of correction risks is necessary.