The Three-Line Break Chart Suggests Growth

The three-line break chart for Bitcoin ($BTC ) indicates a bullish breakout from a seven-month correction trend, suggesting potential movement toward record highs. This chart, which tracks price movements, reveals that BTC has room to rise above its previous all-time highs.

Resistance Around $70,000

While the traditional candlestick chart shows strong resistance around the $70,000 level, many traders focused on this chart may see the situation as stagnant. Despite Monday’s rally that saw Bitcoin’s price rise by more than 5% to $66,000, BTC remains stuck in a downward channel that has lasted for seven months.

Breakout on the Three-Line Break Chart

The lesser-watched three-line break chart shows a bullish breakout on Monday, indicating the resumption of the broader uptrend that began in October 2023, when Bitcoin hit a low near $30,000. If the bulls hold their ground, Bitcoin could reach new record highs above $73,000.

How Does the Three-Line Break Chart Work?

The three-line break chart focuses on price movements and trend reversals while ignoring time, helping traders filter out price noise and better track ongoing trends and potential reversals. Originating from Japan, this chart allows traders to adapt to market dynamics, as reversals occur based on actual market conditions.

The chart consists of vertical blocks, called lines or bars, which are either green or red. A bullish reversal, represented by a new green bar, occurs when the price moves higher than the highest point of the previous three red bars. A bearish reversal (new red bar) happens when the price falls below the lowest point of the previous three green bars.

Bullish Trend Continuation

A bullish trend continues when the price rises above the previous green line, confirming the extension of an existing uptrend. This is exactly what happened on Monday when the green bar broke above the trendline from the March and April highs.

Risks and Warnings for Traders

While the three-line break chart suggests potential for Bitcoin to rally to new highs, traders should be aware of two key risks:

  1. Strong Resistance Around $70,000
    The candlestick chart shows that since March, Bitcoin has consistently failed to break above the $70,000 level. There is a possibility that prices will once again face tough resistance around this point.

  2. Potential Invalidation of the Bullish Trend
    The second risk lies in the possibility that a new red bar appears on the three-line break chart, pulling the price back into the downward channel, invalidating the bullish breakout. Failed breakouts often lead to deeper price declines, as seen in late September.

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