This Chart Indicates Bitcoin May Be Headed For Record Highs Above $73K
BTC’s “three-line break chart” suggests a bullish resolution of the seven-month-long corrective trend and scope for a move to record highs.
Candlesticks indicate stiff resistance at around $70,000.
Traders fixated on bitcoin’s (BTC) daily candlesticks chart may be bored, as despite Monday’s rally, prices remain locked in a seven-month-long descending channel. However, a lesser-tracked “three-line break chart” now suggests a bullish outlook favoring a move to record highs.
The leading cryptocurrency by market value rose over 5% to $66,000, registering its biggest single-day gain since Aug. 23, according to CoinDesk Indices data.
Still, the daily candlesticks chart suggests a neutral outlook, as BTC remains trapped within a seven-month-long corrective descending channel, identified by trendlines connecting highs reached in March and June and lows registered in May and July.
However, the three-line break chart shows that the breakout of the prolonged descending channel happened on Monday and the broader uptrend from October 2023 lows near $30,000 has resumed. The bull victory could lead to record highs above $73,000.
The three-line break chart might look like the candlesticks chart but focuses on price movements and changes in trend while ignoring time, helping traders filter out erratic price movements and noise while gauging the ongoing trend and potential trend reversals.
“A Japanese trader described the three-line break chart as a more subtle form of point and figure charts where reversals are decided by the market and not by arbitrary rules, that means we can gear it to the strength and dynamism of the market,” chartered market technician Steve Nison said in his book “Beyond Candlesticks”.
The line break chart consists of vertical blocks called lines or bars (green and red). A bullish reversal, represented by a new lineup (green bar), happens when the price moves higher than the highest point of the last three red lines. A new red line (bearish reversal) occurs when the price moves below the lowest point for the previous three green lines.
A bullish continuation occurs when the price moves above the previous green line, confirming an extension of the already-established uptrend. That’s precisely what happened on Monday, with the green bar cutting through the trendline off March and April highs, as seen below.
While the breakout on the line break chart indicates the scope for a rally to new peaks, traders should be watchful of two things, the first being the candlestick chart, which shows bulls have consistently failed to secure a foothold above $70,000 since March. Prices could again encounter stiff resistance around that level.
The second thing to watch out for is bullish invalidation on the line break chart, represented by a new red bar taking prices back inside the channel. Failed breakouts often lead to deeper price slides as observed in late September.
