• HYPE price recovery is poised for a major breakout from the resistance trendline of the flag pattern resistance at $32.
• Market data suggests ongoing deleveraging and rising uncertainty around HYPE’s price outlook.
• The 200 exponential moving average in the 4-hour chart offers dynamic support to the HYPE price amid occasional pullbacks.

HYPE, the native token of decentralized perpetuals exchange, Hyperliquid, jumped over 5.72% to $31 on Thursday. The uptick defied the broader market correction when Bitcoin price reverted below the $66,000 mark. While trading volume on Hyperliquid exchange has depleted significantly this week, the coin price remains steady above the $28.3 level and highlights a potential recovery ahead amid the formation of the bull flag pattern.

Hyperliquid Futures Activity Shows Cautious Sentiment

On February 12th, the crypto market witnessed a notable pullback of over 2% to reach a market cap of  $2.2 Trillion. This downtick followed a sharp sell-off of U.S. market  stocks, especially the tech securities like Apple (-5.027) and Nvidia (-1.15)

While a majority of major cryptocurrencies follow this momentum to drive an extended downtrend, the HYPE price shows a notable rebound from $28 support with a morning star candle.

Throughout February, the coin price showed firm sustainability above the $28 floor amid recent news such as Ripple adding Hyperliquid to its institutional prime brokerage platform, and the scheduled token unlock being slashed by 88%.

However, the recent data from onchain analytics platform Alphractal shows a potential threat for this asset. CEO Joao Wedson highlighted a massive spike in leveraged perpetual positions last week, with trader activity reaching new highs on the decentralized exchange. This was a frenzy that saw unprecedented numbers of high-leverage bets as people piled in on strong momentum.

The surge reversed within a short time in recent days. Position counts plummeted, pointing to major exits by large funds, big hands, and algorithmic trading desks that require fast execution. Many of these entities have not scaled back or closed out entirely.

Concurrent data indicate a slight decline in the overall total open interest for HYPE futures contracts, which now stands at $1.34 billion after a drop of around 2% in the last day. Long-side liquidations have outnumbered shorts, taking the long-to-short ratio below parity, reflecting cautious deleveraging across the platform.

Hype Price Eyes Bullish Breakout From Flag Pattern

The 4-hour chart analysis of HYPE price shows a potential formation of a classic bullish continuation pattern called a flag. The chart setup is characterized by a long ascending pole denoting the dominant bullish trend, followed bya temporary correction between two parallel walking trendlines.

Amid the recent rebound, the HYPE price shows a fresh upswing within the pattern’s channel formation to the current trade at $31. With sustained buying, the buyers could push the price another 3.8% to challenge the flag’s upper boundary at $32. 

A bullish breakout from this resistance will accelerate the buying pressure in the HYPE market, setting its potential target for $36.2, followed by $38.3.

On the contrary, if the sellers continue to defend the overhead resistance trendline, the coin price could drive a prolonged correction trend in the second half of February.

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