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Homeweb3.0Bitcoin Could Witness a Drop to the $40,600 Level, Analyst Ali Martinez Explains

An analyst has explained how Bitcoin could witness a drop to the $40,600 level based on a pattern forming in its 2-month price chart.

Bitcoin Could Witness a Drop to the ,600 Level, Analyst Ali Martinez Explains

An analyst has shared their analysis on how Bitcoin could witness a drop to the $40,600 level. This analysis is based on a pattern that has formed in BTC's 2-month price chart.

According to the analyst, a Tom Demark (TD) Sequential signal has appeared in the 2-month price of Bitcoin on X. The TD Sequential is a technical analysis (TA) indicator that is commonly used to identify potential نقاط الانعكاس in an asset’s price.

This indicator consists of two phases: setup and countdown. In the first of these setups, candles of the same color (that is, either red or green) are counted up to nine. Once these nine candles are in, the asset can be assumed to have reached a point of turnaround.

Naturally, if the candles that led to the setup's completion were green, then the TD Sequential would give a sell signal. Conversely, red candles could indicate that a bottom may be in.

Once the setup is complete, the second phase of the indicator, the countdown, begins. The countdown works much like the setup, with the main difference being that candles here are counted up to thirteen, instead of nine. Following these thirteen candles, the asset may be considered to have reached another potential top or bottom.

Recently, Bitcoin has completed a TD Sequential phase of the former type. Below is the 2-month price chart of the cryptocurrency shared by the analyst, which shows this signal:

As can be seen in the above graph, the Bitcoin 2-month price has recently finished a TD Sequential setup with nine green candles, suggesting that the cryptocurrency may have encountered a top of some sort.

Since the signal appeared, BTC has been on the way down, with its price currently below the $57,000 level. Thus, it is possible that this pattern's bearish effect may already be taking hold.

As for how deep this drawdown can take Bitcoin, Martinez has pointed out the support level at $51,000. This level corresponds to the 0.236 Fibonacci Retracement level from the recent BTC top.

Fibonacci Retracement levels are based on the Fibonacci series, where dividing each number (beyond 5) in the series by the next numbers produces ratios that are consistent throughout the series.

It is possible that Bitcoin may find support at the next such important ratio, but the analyst notes that if the $51,000 support gets breached, the cryptocurrency could end up going all the way down to $40,600, which corresponds to the 0.382 Fibonacci Retracement level.

In the scenario that BTC does end up revisiting this level, its price would have gone through a drawdown of more than 28% from the current level. It now remains to be seen how the asset’s trajectory plays out from here.

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