Arbitrum's native token ARB dropped 7% in the latest trading session, pushing its Relative Strength Index to 22.84 — deep into oversold territory. The move has traders watching for a potential short-squeeze rally that could push the price up to the $0.12 resistance level, though any bounce may prove temporary.
Oversold RSI and what it means
The RSI reading of 22.84 is far below the 30 threshold often considered oversold. That typically signals that selling pressure has exhausted itself and a rebound could be due. But the indicator alone doesn't guarantee a reversal — it's a warning light, not a green flag. ARB is now trading at levels where short sellers who bet against the token might be forced to cover their positions, adding fuel to a possible upward move.
Short-squeeze scenario
A short squeeze occurs when a sudden price increase forces traders who bet on a decline to buy back tokens, amplifying the rally. With ARB's RSI in oversold zone, the conditions for such a squeeze are aligning. Analysts expect the bounce could target the $0.12 mark, a level that previously acted as support and now stands as the nearest resistance. Whether that target is reached depends on buying volume and the willingness of short sellers to capitulate.
Overhead resistance caps upside
But the path to $0.12 is cluttered. All of ARB's moving averages — short-term and long-term — are currently positioned above the current price, acting as overhead resistance. That technical setup suggests that even if a short-squeeze rally materializes, it may run out of steam quickly. Traders will watch to see if the token can break through the first moving average before betting on a sustained recovery.
The unresolved question now: will enough short sellers fold to push ARB to $0.12, or will the overhead moving averages smother the bounce before it gains traction? The next few sessions should provide the answer.
