The cryptocurrency market is currently experiencing significant volatility, with major assets like Bitcoin (BTC) and Ethereum (ETH) trading lower. This market downturn has led to substantial liquidations, totaling nearly $879 million, with long orders accounting for the majority at $765 million.
In line with the broader market trend, Hyperliquid (HYPE) has also seen a 10% decrease in price today. However, the cryptocurrency's latest 1-hour chart structure suggests a potential for a bullish reversal, aligning with a recognized "Power of 3" pattern that could precede a rebound if confirmed.
Power of 3 Pattern Formation
On its 1-hour chart, HYPE appears to be developing the Power of 3 formation. This pattern is characterized by three distinct stages reflecting market sentiment and behavior: accumulation, manipulation, and expansion.
Accumulation Phase
Hyperliquid (HYPE) previously consolidated within a range defined by resistance at $49.35 and support at $46.00 for several trading sessions. This period of sideways movement indicated an accumulation phase, where informed market participants were likely building positions discreetly while the price remained stable and trading volume was low.
Manipulation Phase
During the recent market correction, HYPE experienced a price drop below the $46.00 support level, reaching a low of approximately $42.72. The asset quickly recovered to trade around $44.16. This price action, depicted by the red-shaded area on the accompanying chart, is interpreted as the manipulation stage. This phase often involves a temporary breakdown to shake out less committed traders before the next upward movement commences.
Potential Next Steps for HYPE
Currently, HYPE is trading within the identified manipulation zone, suggesting that the market is testing investor sentiment before potentially transitioning to the expansion phase.
If buyers can maintain support above the $42.72 level and successfully reclaim the $46.00 range, alongside breaking through the 100-hour moving average (MA) currently situated near $47.20, the pattern could evolve into the expansion phase. This stage is historically characterized by rapid price increases and represents the most significant part of the Power of 3 cycle.
A confirmed breakout and a subsequent closing price above $49.35 would further validate the bullish reversal signal. Such a development could pave the way for an upward price movement targeting $55.98, which would represent a potential gain of approximately 26% from its current trading levels.
Conversely, if the $42.72 support level fails to hold, the short-term outlook for HYPE could become more bearish. This scenario might lead to the formation of an inverse Head and Shoulders pattern on the daily timeframe, potentially requiring further consolidation before any substantial upward price movement can resume.