Bitcoin (BTC) has continued to plough a furrow to the downside, dropping below $108,000. However, the number one cryptocurrency is now heavily oversold and therefore a reversal makes perfect sense. When could this potential reversal arrive, and what are the upside targets?
Has $BTC formed a double bottom?
Source: TradingView
The odd pattern that had been forming since mid-July has become two descending channels. First, the gently sloping one that found a bottom in early August, and now this steeper descending channel that just might have found a bottom where the price is now. In fact, the $BTC price action might have made a small double bottom reversal pattern, similar to the slightly bigger one that marked the bottom of the previous descending channel. The green arrow traces a possible path for this next potential recovery.
The 4-hour Stochastic RSI indicators are coming down and should have bottomed out by the end of the day, or could even start reversing now. Therefore, this prospective reversal could start to take place from here on in. All the other short-term Stochastic RSI momentum indicators are at the bottom, and even on the higher time frames, the daily, and even the weekly are at the bottom or about to arrive there. As far as price momentum goes the bulls could be back in control very soon.
50-day simple moving average rolls over
Source: TradingView
The daily time frame reveals how the $BTC price action has lost the important support at $109,000. Also, it can be seen that the 50-day SMA (blue line) has turned down. A reversal back to the upside will be needed to stop it dipping under the 100-day SMA (green line). Below this, the 200-day SMA (red line) generally marks the bottom boundary of the bull market, although this has been infringed each time there has been a big correction.
Weekly Stochastic RSI indicators about to reset
Source: TradingView
The weekly chart is starting to look much more positive. In the time that it has taken to write this article till now, the $BTC price has moved up strongly, putting on more than 1% for Monday already. It could be that the major $109,000 level will be considered to have held, as long as this weekly candle is a good one or at least closes above this level.
The major plus for the bulls on this chart is the Stochastic RSI. The indicators are now approaching the bottom and possibly as soon as next week they will have bottomed and could have started to angle back up. If this happens, it could signal the upside price momentum that will be needed to take the price back to the high. Firstly, the bulls need to flip the $112,000 horizontal level back into support. After this, $119,500 marks the candle body closes so this will be a major level to get above. Could this be the start of the next surge to new highs, or are Bitcoin holders about to be disappointed yet again?
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
