Ethereum has triggered a Tom Demark (TD) Sequential sell signal on its weekly chart—a pattern that previously led to a major price drop for the asset.
In a recent post on X, analyst Ali Martinez pointed out that a TD Sequential signal has appeared on Ethereum’s weekly price chart. The TD Sequential is a technical analysis tool often used to spot when a trend might reverse. It has two phases: the setup and the countdown. For this discussion, the setup phase is the key part.
During the setup, the indicator counts consecutive candles of the same color until it reaches nine. When nine candles appear, it suggests the current trend is losing steam. The chart Martinez shared shows that Ethereum’s weekly price has just completed a setup with nine green candles, which could mean the bullish trend is about to reverse.
According to Martinez, this indicator has been fairly reliable for Ethereum over the past year. “Every signal it has given on the weekly timeframe has been followed by significant price moves,” he noted. For example, buy signals in April and June last year led to price increases of 86% and 134%, respectively. A sell signal in August, on the other hand, resulted in a 63% drop.
Now that Ethereum has another weekly sell signal, the pattern might repeat. “To me, this suggests Ethereum is entering another corrective phase,” Martinez said. He set three price targets for ETH: $1,900 in the short term, $1,595 in the medium term, and $1,090 in the long term. The last target is near the bottom of a Parallel Channel, as he pointed out in another post.
A Parallel Channel is a technical pattern where an asset trades between two parallel trendlines. The upper line acts as resistance, and the lower line acts as support. The chart shows that Ethereum has recently been trading in the lower half of a long-term Parallel Channel on the weekly timeframe. Martinez noted, “$1,071, at the bottom of the channel, looks like a strong area to buy Ethereum.”
It remains to be seen whether Ethereum will need to test that support level.
ETH Price
Ethereum has dropped this week and is now trading around $2,220.
Featured image from Dall-E, chart from TradingView.com
Frequently Asked Questions
Here is a list of FAQs about the Ethereum sell signal that previously led to a 63 drop
BeginnerLevel Questions
Q What is this sell signal everyone is talking about
A Its a technical indicator based on past price patterns or market data that historically has predicted a big price drop for Ethereum The one being discussed is the same pattern that appeared right before a 63 crash
Q Does this mean Ethereum will definitely drop 63 again
A No History doesnt always repeat itself The signal is just a warning not a guarantee Other factors can change the outcome
Q Should I sell all my Ethereum right now
A Thats a personal decision not financial advice Many traders use signals as a reason to be cautious but selling everything could mean missing out if the signal turns out to be wrong
Q How often does this sell signal appear
A Rarely Its a specific pattern that has only triggered a few times in Ethereums history which is why its reappearance is getting attention
Q What caused the 63 drop the last time this signal appeared
A The signal itself didnt cause the dropit just warned that market conditions were vulnerable The actual drop was triggered by a combination of factors
AdvancedLevel Questions
Q What exact indicator or metric is being used for this sell signal
A Its often linked to onchain metrics like the MVRV ZScore or a technical pattern like a death cross on the weekly chart The specific signal referenced here is likely a multimonth divergence between price and network activity
Q How reliable is this signal historically
A It has a high historical accuracy for predicting major tops but its not perfect False signals have occurred leading to smaller pullbacks instead of a full crash