HYPE is showing early signs of a bullish reversal, with a potential inverse head and shoulders pattern forming

HYPE is showing early signs of a bullish reversal, with a potential inverse head and shoulders pattern forming on the chart. If confirmed, this setup could mark the end of the current downtrend and open the door to a bullish expansion targeting $25.

Hyperliquid (HYPE) is showing early signs of a bullish reversal, with a potential inverse head and shoulders pattern forming on the chart. If confirmed, this setup could mark the end of the current downtrend and open the door to a bullish expansion targeting $25.

What is an inverse head and shoulders pattern?

An inverse head and shoulders pattern is a bullish chart pattern that signals the potential reversal of a downtrend. It is composed of three troughs, with the middle trough being lower than the other two. These troughs form the “shoulders” of the pattern, while the high between the left and middle troughs forms the “head” of the pattern.

The neckline is a line drawn connecting the highs of the two shoulders. It is an important level to watch, as a break above it could confirm the pattern and spark an upward move.

Key observations:

HYPE has already formed a well-defined left shoulder and a deep head, showcasing a strong retracement and potential bottoming formation. As the price begins to rise from the most recent low, the next crucial step is the formation of a higher low, which would complete the right shoulder of the pattern.

This structure, if completed, signals a potential trend reversal and accumulation phase.

The neckline at $17.17 is pivotal for breakout confirmation. A clean move above this level, particularly with surging volume, would validate the pattern and likely kickstart the bullish expansion.

Volume serves as a critical filter, aiding in the differentiation between genuine breakouts and futile attempts. A significant increase in trade activity is usually observed when an asset breaks through a key resistance level.

In the case of HYPE, traders should closely monitor the volume profile as the price approaches the $17.17 neckline. A substantial spike in volume during the breakout would provide a strong indication of institutional interest and support for further upward movement. Conversely, a lackluster breakout with low volume could indicate a weaker breakout attempt, which might be quickly reversed.

If confirmed, this pattern sets the stage for a potential move toward $25.05. This target is calculated by measuring the depth of the head to the neckline and applying that distance above the breakout level.

What level invalidates the pattern?

The swing low—the lowest point of the head—remains the invalidation level for this setup. A break below that low invalidates the pattern, and any bullish bias should be reconsidered.

However, if the right shoulder forms and holds, this zone offers a strong risk-reward entry ahead of a potential breakout from the neckline.

How to trade this pattern:

Wait for a higher low to form (the right shoulder), signaling bullish structure.

A breakout above the neckline, ideally with surging volume, could confirm the pattern.

The overhead resistance is at $17.17, and a break above it, coupled with increasing volume, could propel HYPE toward the $25.05 target.

The lower boundary of the pattern, around $13.96, offers support. A break below this level could invalidate the pattern and suggest further downside potential.