Hyperliquid: Why HYPE’s pullback from $38 could be healthy
The rally to $38.4 in early February represented a bullish structural shift, and the current price dip was a retracement phase.
In a recent report, the large cluster of long liquidations below $30 for Hyperliquid [HYPE] led AMBCrypto to conclude that there was potential for a drop below $28 to hunt down the long positions.
This has since come true, aided by the Bitcoin [BTC] drop to $64.3k on Sunday. Hyperliquid was attracting capital, with high capital inflows to the ecosystem. This boded well for the token and the DEX in the long-term.
Based on the evidence at hand, HYPE bulls were setting up for an explosive rally. The macro conditions and BTC volatility were challenges that could delay the upward move, but the fundamentals were strong.
The 1-week chart has a bullish structure. The Fibonacci retracement levels showed that the fall to $20.48 in January was part of a retracement, with the golden pocket extending from $28.44 to $20.02.
Why you should think of buying this HYPE dip
The 1-day chart showed a bullish swing structure in place for HYPE. This occurred after the lower high at $28.4, set in the first week of January, was breached. That rally reached $38.42 in the first week of February.
It also outperformed major crypto assets by a sizeable margin. However, traders who bet on a bullish continuation faced losses and liquidations as the DEX token retraced its rally, falling below $30 on the 10th of February.
Yet, this was part of a healthy retracement. HYPE swing traders and investors can wait for the $24.3 level to be defended before looking to go long. This level was the 78.6% Fibonacci retracement level for the bullish swing move.
It also has confluence with an imbalance on the daily chart (white box) that could get filled.
A drop below $23.4 would be an early sign that the bulls lacked the strength to drive a recovery. In this scenario, traders and long-term buyers need to prepare for the bullish setup to get invalidated.
A move below $20 would confirm bearish strength, and buyers will need to wait for an internal structure shift before looking to go long again.
Final Summary
- The Hyperliquid volatility in February was a bullish structure shift and a subsequent retracement.
- Given that the weekly structure was also bullish and the $20 was a long-term support, HYPE appears nearly ready for its next rally.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
