Trader HBAR faces a $6 million liquidation risk due to overbought conditions

The price of Hedera (HBAR) has experienced a strong rally in recent sessions, bringing it close to an important resistance zone. This upward momentum has sparked hope for a market recovery, albeit temporarily.

However, HBAR has once again been blocked at a price level it has struggled to break through for several weeks, causing bullish traders to face risks as selling pressure continues to increase.

Loss Risks for HBAR Investors

Most HBAR traders are betting on an uptrend, continuously opening long positions in anticipation of a breakout. Data from the derivatives market shows that bullish sentiment still dominates. However, this confidence may be premature as technical barriers have yet to be broken.

The liquidation heatmap data indicates that risk is concentrated in the $0.124 to $0.122 price range. If the price drops lower, an estimated $6.23 million in long positions could be liquidated. This would increase selling pressure and undermine bullish confidence.

HBAR Liquidation Heatmap | Source: Coinglass Forced liquidations often accelerate downward movements. When leverage is wiped out, selling pressure intensifies, leading to further sharp declines. In this context, HBAR will be vulnerable if demand is not strong enough to absorb the supply at the current price zone.

HBAR Is Overbought

Momentum indicators are signaling caution. The Money Flow Index (MFI) has surpassed the 80.0 threshold, indicating that HBAR is in an overbought state. This often signals that the market is overextended, rather than showing sustainable strength.

The MFI combines price and volume data to assess buying and selling pressure in the market. When this indicator remains high, the market often corrects as buyers lose control. For HBAR, this suggests the current rally may be nearing exhaustion.

HBAR MFI Indicator | Source: TradingView Although overbought conditions do not necessarily mean an immediate reversal, they increase the likelihood of corrections, especially when combined with strong resistance zones and high leverage ratios.

Can HBAR Break Out of the Downtrend?

Currently, HBAR is trading around $0.126, below the resistance zone at $0.130. The price has also failed to break above the six-week-long downtrend line, which has repeatedly hindered previous recoveries. These factors are limiting HBAR’s ability to sustain its upward momentum.

Given market sentiment and current leverage positions, the probability of rejection at the resistance zone is quite high. If the price drops below $0.125, HBAR could continue falling toward the support zone at $0.120, triggering liquidation of long positions and accelerating the decline.

HBAR Price Analysis | Source: TradingView Nevertheless, an upward scenario could still occur if supporting factors emerge, such as strong buying demand in the spot market or a broader market recovery. If HBAR manages to surpass the $0.130 resistance zone and break the downtrend, the price could rise to the $0.141 level, reversing negative outlooks and restoring investor confidence.