HYPE's Rounding-Top Pattern and Imminent Support Breakdown: A Bearish Play for Strategic Shorts

Hyperliquid's HYPE token is at a critical juncture in late 2025, with technical indicators and market structure painting a compelling case for short-term bearish positioning. While bullish narratives highlight potential rebounds toward $40–$50, the confluence of a developing rounding-top pattern, weakening momentum, and proximity to key support levels suggests a higher probability of a breakdown. This analysis unpacks the mechanics of the trade and why strategic shorts should prioritize HYPE in the coming weeks.

1. Rounding-Top Pattern: A Classic Bearish Reversal

HYPE's price action over the past six months has formed a textbook rounding-top pattern, a bearish reversal structure characterized by a gradual decline from a peak, followed by a consolidation phase and a decisive breakdown. The pattern's validity hinges on three key elements:
- Price consolidation around the $35–$36 range, where HYPE has failed to reclaim critical resistance levels despite multiple attempts according to technical analysis.
- Volume divergence, with buying pressure waning as the price approaches the pattern's apex. On-chain data from Glassnode shows shrinking market cap and consistent selling pressure, signaling cautious sentiment as per market data.
- Neckline confirmation, where a breakdown below the $34.83 support level would validate the pattern and target a drop to $25–$22 according to market forecasts.

Analysts like Crypto Tony note that HYPE's inability to hold the $37–$38 zone-a potential catalyst for a $40–$50 surge-has shifted the narrative toward bearish bias according to market insights. The rounding-top's completion would align with historical precedents in HYPE's price cycles, where similar patterns preceded sharp corrections.

2. Weakening Momentum: RSI and DMI Signal Divergence

Technical indicators further reinforce the bearish case. The Relative Strength Index (RSI) currently sits at 46, a neutral reading, but recent price lows have diverged from RSI lows, hinting at waning bullish momentum according to technical analysis. This divergence is a red flag for short-term traders, as it often precedes breakdowns.

The Directional Movement Index (DMI) adds another layer of bearish confirmation. While the +DI line crossed above the -DI line in late November, signaling a potential bullish trend, the ADX reading of 21.09 (just above the 20 threshold for a strong trend) suggests a weak directional move according to technical indicators. Crucially, the majority of moving averages (EMA and SMA) remain above the current price, contributing to a "Strong Sell" rating according to technical analysis. This contradiction between DMI and broader trend indicators underscores market indecision, a precursor to breakdowns.

3. Key Support Levels: A Looming Catalyst for Shorts

HYPE's proximity to critical support levels amplifies the urgency of the bearish setup. The immediate focus is on the $34.83 support, a psychological and technical floor that has repeatedly failed to hold buying pressure according to market analysis. A breakdown below this level would trigger a cascade of stop-loss orders and expose the $28–$31 zone, where long-term accumulation is expected to occur according to technical forecasts.

Deeper support at $25 represents a high-probability target for shorts, as analysts warn of potential retracements if HYPE fails to consolidate according to market analysis. The $25–$22 range also aligns with the token's pre-2025 liquidity levels, where institutional buyers are historically more active. A breakdown to this region would not only validate the rounding-top pattern but also create a vacuum in liquidity, prolonging the correction.

4. Macro Risks: Token Unlock and Liquidity Pressures

The November 29 token unlock of 9.92 million HYPE tokens has introduced a significant supply shock, testing the market's ability to absorb increased liquidity according to market analysis. While bullish analysts argue that strong order-book liquidity between $35 and $36.5 could cushion the impact according to technical data, a weak reaction would accelerate the descent toward $25. This event, combined with the convergence of the 50-day and 200-day EMAs (a potential Death Cross), raises concerns about a broader sell-off according to technical indicators.

Conclusion: Strategic Shorts and Positioning

For traders seeking to capitalize on HYPE's bearish setup, the key is to focus on short-term volatility rather than long-term fundamentals. A breakdown below $34.83 would trigger a high-conviction short, with initial targets at $28–$31 and a final target of $25. Stop-loss orders should be placed above $37 to mitigate risks from false breakdowns.

While bullish narratives highlight the potential for a $50–$200 rebound in 2026 according to market forecasts, the immediate technical landscape favors shorts. The rounding-top pattern, divergent momentum indicators, and proximity to key support levels create a high-probability trade with clear risk-reward parameters. As the market digests the token unlock and tests critical levels, strategic shorts can position themselves to profit from HYPE's near-term bearish trajectory.