One analyst has explained how Bitcoin could see a drop to $40,600 based on a pattern forming on its two-month price chart.
Bitcoin Received a Sell Signal from the TD Sequential on the Two-Month Price Chart. In a new post on X, analyst Ali Martinez discussed a Tom Demark (TD) Sequential signal that appeared on the two-month price of Bitcoin. The TD Sequential is a technical analysis indicator used to spot potential reversals in the price of any asset.
This indicator consists of two stages: setup and countdown. During the setup stage, candles of the same color (red or green) are counted up to nine. After completing these nine candles, the asset may have reached a reversal point.
If the candles leading up to the completion of the setup are green, the TD Sequential will give a sell signal. Conversely, red candles may indicate that the bottom has come.
Once the setup is complete, the second phase of the indicator, the countdown, will begin. The countdown works similarly to the setup, with the main difference being that the candles will count to thirteen instead of nine. After these thirteen candles, the asset can be considered to have reached another potential top or bottom.
Bitcoin recently completed a first-of-its-kind TD Sequential. Here is a two-month price chart of Bitcoin shared by the analyst, showing this signal:
As the chart above shows, the Bitcoin price on the two-month chart recently completed a TD Sequential with nine green candles, suggesting that the cryptocurrency may have reached some sort of top.
Since the signal appeared, BTC has been steadily declining, with the current price below $57,000. Therefore, it is possible that this bearish pattern has come into effect.
Regarding Bitcoin's possible decline, Martinez points to support at $51,000, which corresponds to the 0.236 Fibonacci Retracement level from BTC's recent high.
Fibonacci Retracement levels are based on the Fibonacci sequence, where dividing each number (after 5) by the next number in the sequence will create consistent ratios throughout the sequence.
It is likely that Bitcoin will find support at the next key level, but the analyst notes that if the $51,000 level is broken, the cryptocurrency could drop to $40,600, which corresponds to the 0.382 Fibonacci Retracement level.
In this scenario, if BTC does indeed return to this level, its price would drop more than 28% from current levels. Now, we will wait and see how this asset develops.
BTC Price: Over the past day, Bitcoin has continued to decline further and the current price has dropped to $56,600.
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