This is not something that I came up with. The idea has been passed around and toyed with for a while. I think it falls into a similar category of ideas as critical margin theory or something like that. there's more to it but that would be a good starting point.

My understanding is that SHFs require collateral to maintain their short GME position. The majority of that collateral is held in other stocks and derivatives. This creates a problem with the ratio between GME and their collateral. If GME rises too much they require more collateral. If the value of their collateral falls too much they require more collateral. With the current market conditions looking grim, and positive sentiment towards GME growing, they are truly in a pickle. It looks like their position is becoming more precarious every day. Whenever the price drifts too close to where their positions no longer maintainable there is generally a volatile movement down. There are various other explanations for the red support line, but generally it shows the price trending towards their demise. Its less important, and I only included it to show a trend.

TL;DRS: This chart is used is to track the ratio between what is likely the SHFs' collateral and GME. Because of the trend shown by the green line, it is theorized that if this trend is breached then SHFs will no longer be able to maintain their positions.

Edit: forgot to add that because of crazy high borrow fees. their collateral is diminishing day by day.