Hyperliquid (HYPE) has experienced a notable downturn in the past week, with its value dropping by 16%. As it nears a critical support level at $11, the token is showing signs of weakening momentum, raising concerns among investors. Despite its strong performance in terms of fee generation over the past 30 days, outpacing major blockchains like Ethereum and Solana, HYPE’s technical indicators suggest that the market may be under bearish control in the short term.
Declining Momentum: Directional Movement Index (DMI) Shows Sellers Gaining Ground
One of the most significant indicators pointing to a potential continuation of the downtrend is the Directional Movement Index (DMI), which tracks the strength of trends in the market. In the case of Hyperliquid, the Average Directional Index (ADX) has risen from 21.5 to 23.6, signaling a potential strengthening of the current trend. However, it has yet to cross the critical threshold of 25, which would confirm that a strong trend is forming.
Looking deeper into the DMI, the +DI line, which indicates bullish momentum, has dropped sharply from 25.68 to 12.79. Meanwhile, the -DI line, which represents bearish momentum, has risen from 11.29 to 23.4. This shift indicates that bearish pressure is outweighing bullish momentum, signaling that sellers are increasingly in control of the market. Unless the +DI can reverse its current downward trend and regain momentum, HYPE could continue to face selling pressure, potentially leading to further losses.
RSI Indicates Weakening Bullish Momentum
Hyperliquid’s Relative Strength Index (RSI) has also shown signs of a lack of buying momentum. The RSI, which measures the speed and magnitude of recent price changes, has dropped significantly from 63.03 to 39.39. Generally, an RSI reading below 30 indicates that an asset is oversold and could be due for a rebound, but with the RSI currently sitting at 39.39, there are no immediate signs of a reversal in momentum.
This decline in the RSI further suggests that buyers are not stepping in to support HYPE, and instead, the market is more heavily influenced by sellers. The fact that HYPE’s RSI has not reached the overbought territory (above 70) since March 24 signals a lack of strong buying interest, further reinforcing the bearish sentiment surrounding the asset.
Approaching Key Support at $11: Will HYPE Bounce Back?
As HYPE nears the $11 support level, it faces a crucial test. If the bearish trend continues, the token could break below this key support and head toward lower levels, which could trigger a deeper correction. The technical indicators, including the falling RSI and increasing bearish pressure from the DMI, suggest that the price could dip below $11 in the short term.
However, there is still a possibility for a rebound if buyers step in. A break above the immediate resistance at $12.19 could indicate that the bearish momentum has started to subside. In that case, HYPE might see a rally toward the next resistance at $14.77, and potentially even as high as $17.33 if the bullish momentum strengthens.
What’s Next for Hyperliquid?
While the short-term outlook for Hyperliquid appears bearish, there is potential for a reversal if the broader market sentiment shifts or if buyers show renewed interest in supporting the asset. The next few days will be crucial in determining whether HYPE can maintain its position above the $11 support level, or if it will fall further, signaling a more prolonged bearish trend.
For now, investors need to keep a close eye on the price action and momentum indicators, especially the RSI and DMI, to assess whether the market conditions will favor a bullish reversal or whether further downside is ahead. As the token approaches critical support, the coming days will be key in deciding its next move.
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