On Monday Bitcoin price (BTC) abruptly fell below the $7,040 support and dropped to $6,800. As recent as Nov. 22 and Nov. 27, $6,800 served as support so a number of traders had already identified the price as the point where Bitcoin would land if the price pulled back.

Cryptocurrency market daily overview. Source: Coin360

At the time of writing Bitcoin is struggling to hold $6,600 and if the current level fails to hold, traders will look for the price to follow the familiar pattern of dropping to the long-term descending channel trendline support at $6,400. Let’s take a look at several technical reasons why BTC/USD is now eyeing a new 7-month low.

Bear crosses galore (bear crosses on multiple timeframes)

As mentioned by Cointelegraph analyst Keith Wareing, BTC is resoundingly bearish on multiple time frames.

Moreover, yesterday’s downside move produced a bear cross on the monthly moving average convergence divergence (MACD) for the first time since June when the signal line crossed above the MACD line.

MACD flips negative

The monthly MACD histogram also flipped negative, suggesting that further downside could be in store for Bitcoin.

BTC USD MACD monthly chart. Source: TradingView

Bear cross between key long-term MAs

Another disconcerting sign on the daily time frame is a bearish cross between the 100-day and 200-day moving average, something which according to the chart below does not happen often.

BTC USD daily chart. Source: TradingView

Bulls appear to have abandoned the $6.8K bounce

The daily timeframe also shows that the relative strength index (RSI) has dipped into oversold territory and the lack of follow-through from traders buying into the dip means a strong oversold bounce has yet to occur.

The last time Bitcoin price dipped to $6,522, the RSI dropped to 22 so if the sell-off resumes, the RSI could easily drop to this level again.

BTC USD daily chart. Source: TradingView

A revisit to the descending channel lower support at $6,400 is not exactly disastrous for Bitcoin price. Traders who analyze the weekly timeframe will remember that Bitcoin traded in the $6K region for nearly 8 months prior to the November 2018 drop to $3,100.

Furthermore, seasoned traders will recall that every Tom, Dick and Harry had called $6K the bottom prior to the Bitcoin Cash (BCH) hard fork debacle in November 2018, which may have been one of the reasons for the unexpected drop to $3K.

BTC USD weekly chart. Source: TradingView

As shown by the volume profile visible range (VPVR) on the weekly timeframe, Bitcoin has support to about $6,300 then below $6,200 the price could swiftly drop to $5,350 where support was built on Bitcoin’s parabolic move from $3,120 in February.

BTC USD weekly RSI chart. Source: TradingView

The RSI on the weekly timeframe is at 39.6 and slowly creeping toward oversold territory. The last time the weekly RSI was oversold was on Dec. 10 when the price was $3,160 and Jan. 21 at $3,425.

Double bottom or nothing?

While the analysis is not calling for a drop to $5,300 or $4,100, Bitcoin’s price action on multiple time frames suggests further downside so it’s crucial to be realistic and honest, rather than driven by emotion and hope.

On the bright side, there’s always the possibility that the price could form a double bottom at $6,520, a point that was seen on Nov. 25 and May 17, 2019.

Ultimately, Bitcoin price needs to hold the pink highlighted zone between $6,700 and $6,300 to avoid a drop back toward the May through April lows in the $4,900 to $5,500 region.

In the meantime, traders should keep an eye out for a possible double bottom around $6,530 and given that the daily and weekly RSI and Stoch are oversold, aggressive traders might look to play an oversold bounce, which seems ripe to take place as Bitcoin comes closer to falling below the long-term descending channel support at $6,400.

Cautious traders can observe to see how traders and price react to this oversold bounce (if it even happens), and they can also watch to see if the daily RSI becomes deeply oversold to form a double bottom at 22.

A relatively risk-free trade might involve playing a bounce at $6,500 to $6,400 with a stop loss placed closely below the entry. If this tactic proves fruitless, then the next option might be setting up a low leveraged long at $5,300 or at least looking to play a deeply oversold bounce at this price.

The views and opinions expressed here are solely those of the author (@HorusHughes) and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.