Hyperliquid (HYPE) Pulls Back 11% After Key Pattern Completion

Hyperliquid (HYPE) has recently experienced a pullback following the completion of a key pattern, raising questions about its potential to bounce back. The cryptocurrency, which has been trading near its all-time high, is currently showing signs of a short-term correction. This pullback is part of a broader trend observed in the cryptocurrency market, where assets often experience temporary declines after reaching significant milestones.

Ask Aime: Will Hyperliquid bounce back after its recent pullback?

The completion of the key pattern suggests that HYPE may be entering a phase of consolidation. This pattern is often seen as a precursor to a potential rebound, as it allows the asset to stabilize before resuming its upward trajectory. The current price action indicates that HYPE is trading in a descending wedge, a technical formation that typically resolves with a bullish breakout. This pattern is characterized by a series of lower highs and lower lows, creating a narrowing range that can lead to a sharp price movement in either direction.

HYPE’s 4-hour chart presents a Bearish Butterfly harmonic pattern — a well-recognized setup that often precedes short-term reversals. The D-point of this pattern was completed near the $42.51 level, aligning perfectly with the 1.272 Fibonacci extension of the X-to-C leg. This region is often referred to as the Potential Reversal Zone (PRZ) — and true to form, price action reversed sharply from this zone. Following this completion, HYPE swiftly dropped below the 0.382 Fibonacci retracement level of the CD leg at $38.74, briefly touching a low of $37.31 before recovering slightly to $39.13 at the time of writing.

Now that the $38.74 level (0.382 Fibonacci) has been tested, traders are watching to see if this zone can establish itself as support. If it holds, there is potential for a bullish bounce — possibly retesting the recent highs near $42.50. However, if price action slips further below $38.74, the next key level to watch is the 0.618 Fibonacci retracement at $36.41. This zone is commonly seen as a deeper correction area and may serve as a more robust support, potentially triggering a stronger reversal. In either case, $42.55 remains the upside target if bulls regain control — but much depends on how price behaves in the $38–$36 range.

Analysts have noted that the pullback in HYPE is not necessarily a cause for concern. In fact, it could be seen as a healthy correction that allows the asset to build a stronger foundation for future growth. The current price level of HYPE is still relatively high, and the pullback provides an opportunity for investors to enter the market at a more favorable price point. The descending wedge pattern also suggests that the asset has the potential to break out to new highs once the consolidation phase is complete.

The broader cryptocurrency market has been experiencing a period of volatility, with many assets undergoing similar pullbacks. This volatility is a natural part of the market cycle and can provide opportunities for investors to accumulate positions in promising assets. HYPE's pullback is part of this broader trend, and its potential to bounce back will depend on its ability to maintain support levels and break out of the descending wedge pattern.

Investors should keep an eye on key support levels as HYPE navigates this pullback. The asset's ability to hold above these levels will be crucial in determining its short-term trajectory. If HYPE can maintain support and break out of the descending wedge, it could see a significant price increase. However, if it fails to hold support, it may experience further declines before finding a bottom.

In conclusion, HYPE's pullback after the completion of a key pattern presents both challenges and opportunities for investors. The asset's ability to maintain support levels and break out of the descending wedge pattern will be crucial in determining its short-term trajectory. While the pullback may be seen as a temporary setback, it also provides an opportunity for investors to enter the market at a more favorable price point. As the cryptocurrency market continues to evolve, HYPE's potential to bounce back will depend on its ability to navigate the current volatility and maintain its upward momentum.