Hyperliquid (HYPE) fell 16% in a week as the bears took control - Will the sell-off continue?

Hyperliquid (HYPE) is facing strong selling pressure, losing 16% of its value in the past seven days as technical indicators continue to lean heavily towards the bears. The bullish momentum has weakened significantly, as reflected by the relative strength index (RSI) falling below the 40 threshold and not recording any significant buy signals since the end of March.

The Directional Movement Indicator (DMI) also reinforces the negative picture, as the ADX line gradually rises – indicating that the downtrend is forming a clearer trend. In the context of HYPE approaching key support levels, investors are currently watching whether the bulls can initiate a recovery, or if the downtrend will continue.

Hyperliquid’s DMI Indicator Shows Bears Are in Control

According to the Directional Movement Index (DMI), Hyperliquid is showing early signs of a trend forming, with the ADX index rising from 21.5 to 23.6.

ADX measures the strength of a trend without differentiating the direction. Values below 20 often indicate a weak or sideways market, while values above 25 suggest a strong trend is forming.

The Directional Movement Indicator (DMI) of HYPE | Source: TradingViewWith the current ADX approaching the 25 threshold, this indicates that trend strength is increasing – although not fully confirmed – and warns traders to closely monitor the potential continuation of price action.

Meanwhile, the +DI and -DI lines, representing upward and downward directional movement respectively, have changed significantly.

The +DI line has dropped sharply from 25.68 to 12.79, while the -DI line has surged from 11.29 to 23.4, indicating that bearish momentum has outpaced buying pressure. This shift suggests that the bears are in control of the market, and unless the +DI line can reverse and regain its position, HYPE may continue to face the risk of a deeper decline.

If the current developments continue, along with the ADX rising, this could be a sign of the beginning of a stronger downtrend.

The RSI indicator of Hyperliquid shows a lack of buying momentum

The RSI index of Hyperliquid has seen a sharp decline in the past two days, from 63.03 down to 39.39.

RSI is a momentum indicator that measures the speed and magnitude of recent price changes, with a scale from 0 to 100.

The RSI index of HYPE | Source: TradingViewValues above 70 often indicate that the asset is overbought and may soon correct, while values below 30 indicate that it is oversold and has the potential to recover. Levels between 30 and 70 are considered neutral, but directional shifts within this range often reflect changes in momentum.

With HYPE’s RSI currently at 39.39, the indicator suggests that bullish momentum is weakening and downward pressure is growing. The fact that the RSI has not touched or crossed the 70 level since March 24 indicates a lack of buying confidence in recent weeks.

The downward trend of the RSI may be a signal indicating that the market is cooling down. Unless the bulls show up to reverse this trend, HYPE may continue to face selling pressure.

If the RSI continues to decline towards the 30 level, it will increase the likelihood of further declines or sideways movement in the short term.

Will Hyperliquid soon drop below the $11 mark?

The current price of Hyperliquid is at a critical level, with a bearish trend but the possibility of recovery has not been ruled out.

If the current downtrend continues, HYPE may soon fall below the $11 mark.

HYPE/USDT chart on the 4-hour timeframe | Source: TradingViewThis will align with the recent decline of momentum indicators such as RSI and the increasing selling pressure reflected through the Directional Movement Indicator (DMI).

However, if the bulls can step in and turn the tide, HYPE may attempt to recover to higher levels. A breakout above the nearest resistance level at $12.19 will be the first signal indicating a recovery, and it could open up the opportunity to rise to $14.77.

If the upward momentum is strongly driven, the recovery could extend to $17.33, marking a complete reversal of the current bearish structure.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should conduct thorough research before making any decisions. We are not responsible for your investment decisions.

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