Bitcoin (BTC) has experienced a significant decline, dropping below $108,000. However, recent technical indicators suggest that the cryptocurrency may be oversold, indicating a potential reversal.

🔄 Double Bottom Formation

Since mid-July, BTC has formed two descending channels. The first, a gently sloping channel, found a bottom in early August. The second, a steeper descending channel, may have reached its bottom at the current price level. This pattern resembles a small double bottom reversal, similar to the previous one that marked the bottom of the earlier channel.

Short-term momentum indicators, such as the 4-hour Stochastic RSI, are nearing oversold conditions and could begin to reverse soon, signaling a potential upward movement.

📉 50-Day Simple Moving Average

The daily chart reveals that BTC has lost the crucial support level at $109,000. Additionally, the 50-day Simple Moving Average (SMA) has turned downward. A reversal to the upside is necessary to prevent it from dipping below the 100-day SMA. Historically, the 200-day SMA has acted as a bottom boundary during bull markets, although it has been breached during significant corrections.

📊 Weekly Stochastic RSI Indicators

The weekly chart is showing more positive signs. As of the article's publication, BTC has gained over 1% on Monday. The $109,000 level appears to be holding, provided the weekly candle closes favorably.

A key indicator for bullish momentum is the Stochastic RSI. The indicators are approaching oversold levels and may begin to rise in the coming week. If this occurs, it could signal the upward price momentum needed to reach previous highs.

The bulls will need to reclaim the $112,000 level as support and then target the $119,500 level, where previous candle body closes have occurred.