Analyzing Hyperliquid's Price Action: Is a Downturn Ahead?

Hyperliquid’s recent price action indicates a significant downturn, as the cryptocurrency struggles to maintain resistance levels. The failed auction suggests a potential decline towards the $19.70 support zone.

Key Takeaways

Hyperliquid's price has confirmed a failed auction after failing to reclaim key resistance.
The inability to maintain higher price levels increases the likelihood of a drop towards $19.70.
Market conditions appear bearish, with weak support and high selling pressure.
Moving averages are serving as dynamic resistance, complicating any potential recovery.

Hyperliquid failed auction suggests further correction.

Understanding the Current Market Situation for Hyperliquid

Hyperliquid's price has recently shown clear bearish signs after failing to break above an important resistance level. Following a brief attempt to rise above this resistance, the price retreated, solidifying the notion of a failed auction. This situation raises concerns about a potential decline towards the $19.70 support range.

HYPEUSDT (4H) Chart, Source: TradingView

What is a Failed Auction?

A failed auction occurs when the price attempts to rise above a critical resistance level. This move often triggers participation from breakouts or liquidity sweeps. However, if the price fails to hold above this level and closes below it, it indicates a lack of sustained demand, suggesting that sellers are overpowering buyers at higher price points.

In Hyperliquid’s case, there was an effort to reclaim the high-resistance zone around the $27 mark, but the price failed to hold that level. This confirmed the failed auction, signaling that there wasn't enough buying strength to push the market bullishly. Instead of moving higher, the price action often indicates a shift back towards previous trading values in search of stronger demand.

Resistance and Support Analysis

After the failed auction, the Point of Control (POC) has become a significant resistance level. In market profile analysis, the POC indicates where the most trading volume has occurred and serves as a price direction pivot.

Trading below the POC suggests that market acceptance has moved lower. This development keeps the short-term outlook bearish and increases the chance of further declines. Currently, the value area low serves as the nearest support zone, but prices are only marginally holding this level. If buying pressure remains weak, this support may be lost, pushing the market toward deeper support levels.

Bearish Market Structure

From a broader market structure perspective, Hyperliquid remains in a bearish state. The failure to reclaim resistance has confirmed seller control, with the recent failed auction favoring continued downward movement rather than a rebound.

Rather than forming a base for a sustainable rally, current price behavior indicates a downward rotation as liquidity and volume recede from the higher price points. In typical failed auction scenarios, the market often revisits the lower bounds of the trading range, where stronger demand typically resides, marking the $19.70 support zone as the next critical target.

The Role of Moving Averages

The positioning of moving averages also adds bearish pressure. When trading below essential moving averages and failing to reclaim them, it typically signals weakened momentum, indicating a downside trend continuation. In Hyperliquid's situation, these moving averages have become dynamic resistance levels that restrict upward movements, bolstering the bearish sentiment as long as the price remains below these averages.

What to Anticipate Moving Forward

Hyperliquid finds itself in a technically precarious position, with the failed auction sign at $27 confirming notable weakness. As long as the price trades below the POC and fails to reclaim crucial moving averages, there remains a heightened risk of a downturn, potentially testing lower support levels.