Bitcoin’s breakdown below the $40,000 support level suggests that the cryptocurrency is on a bearish long-term development, Fairlead Strategies’ Katie Stockton said in a Monday note.
According to the technical analyst, Bitcoin’s $40,000 key support level confirms the breakdown as two weekly Friday closes continue. The breakdown in the largest cryptocurrency implies that there is an elevating downside risk that could push Bitcoin to $27,200; a 29% from the current price.
“Because the monthly [moving average convergence/divergence indicator] is on a ‘sell’ signal, and the monthly stochastics are pointing lower above oversold levels, there is room for further downside in the months ahead,” Stockton explained.
The MACD indicator tracks the movement of moving averages of security and is separate from moving average crossover strategies that include the widely followed death cross and golden cross. Traders use the MACD indicator to gauge short and long-term momentum trends for a security.
“There is a bearish whipsaw in the weekly MACD that we see as a negative intermediate-term catalyst that increases risk to fibonacci support near $27,200,” Stockton said.