Bitcoin Price Plunges to $40,600: TD Sequence Signals Potential PullbackAn analyst has explained why Bitcoin could be headed for a decline to $40,600, based on a pattern appearing on the cryptocurrency's two-month chart. The pattern, known as the Tom Demark (TD) Sequence, is sending a sell signal, suggesting that Bitcoin has likely reached a peak
Bitcoin Price Plunges to $40,600: TD Sequence Signals Potential Pullback
An analyst has explained why Bitcoin could be headed for a decline to $40,600, based on a pattern appearing on the cryptocurrency's two-month chart. The pattern, known as the Tom Demark (TD) Sequence, is sending a sell signal, suggesting that Bitcoin has likely reached a peak.
In a new post on the X platform, analyst AliMartinez discussed the TD sequence signal appearing on Bitcoin's two-month price chart. The TD Sequence is a technical analysis indicator used to identify where a price reversal may occur for any asset. The indicator consists of two phases: the setup phase and the countdown phase.
Setup Phase
In the setup phase, the indicator counts consecutive candles of the same color (red or green) until nine are reached. When these nine candles are complete, the asset may have reached a point of reversal. If the candle that completes the setup is green, the TD sequence signals a sell. Conversely, a red candle indicates that a bottom may have been reached.
Countdown Phase
Following the completion of the setup phase, the indicator enters its second phase the countdown phase. This phase functions similarly to the setup phase, with the primary difference being that the candles are counted to thirteen instead of nine. After these thirteen candles, the asset can be considered to have reached another potential top or bottom.
TD Sequence Signal for Bitcoin
Bitcoin recently completed the first phase of its TD Sequence. Analyst Chia has illustrated Bitcoin's two-month chart, highlighting the signal:
[Image of chart]
As seen in the chart above, Bitcoin price recently completed a TD Sequence with nine bullish candles on the two-month chart, indicating that the cryptocurrency may have reached a peak. Since this signal appeared, Bitcoin has been steadily declining, currently trading below $57,000. As such, this decline pattern may have begun to take effect.
Potential Support and Resistance Levels
In regard to Bitcoin's potential decline, Martinez noted a support level at $51,000, corresponding to the 0.236 Fibonacci retracement of Bitcoin's recent peak. Fibonacci retracement levels are calculated based on the Fibonacci sequence, where each number in the Chia chain (following the number 5) divided by the following number creates a consistent ratio throughout the chain.
Bitcoin is likely to find support at this next key ratio. However, the analyst noted that if the $51,000 level is broken, the cryptocurrency could decline further to $40,600, which corresponds to the 0.382 Fibonacci retracement level. If Bitcoin were to actually pull back to this level, its price would be more than 28% lower than its current level.
Conclusion
The TD sequence signal suggests that Bitcoin may have reached a top and could potentially begin to decline. While the $51,000 level could provide support, if it is broken, Bitcoin could decline further to $40,600. Currently, we wait to see how the asset performs.
Bitcoin Price:
Bitcoin has continued to decline further over the past day, currently trading at $56,600.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Conduct thorough research and risk assessment before making any investment decisions.
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