Traders focusing on Bitcoin’s (BTC) daily candlestick chart may be feeling tense as prices remain stuck in a directionless channel for a long time despite Monday’s rally. However, the “three-line breakout chart” is currently signaling a bullish move, pointing to new record highs.
BTC is stuck inside a seven-month-old falling channel defined by trendlines connecting the highs recorded in March and June with the lows in May and July.
However, the three-line breakout chart shows that this long-term falling channel was broken on Monday, and a broader uptrend that started from October 2023 lows around $30,000 has re-engaged. This rally could lead to BTC reaching new all-time highs above $73,000.
The three-line breakout chart ignores time by focusing on price action and trend reversals, allowing traders to filter out erratic price action and market noise, allowing them to see the ongoing trend and potential trend reversals more clearly.
Will Bitcoin reach a record high?
This chart consists of green and red vertical blocks (lines). When the price rises above the highest level of the last three red lines, a new green line (bullish reversal) is formed. Similarly, when the price falls below the lowest level of the last three green lines, a new red line (bearish reversal) is formed.
The signal that the bull market is continuing comes when the price breaks above the previous green line, confirming that the trend is extending. This happened exactly on Monday, when the green line broke the trend line from the peaks in March and April.
Although this breakout on the three-line breakout chart increases the possibility of a rally to new highs, there are two important points that investors should pay attention to. First, the candlestick chart shows that the bulls have not been able to establish a permanent dominance above the $70,000 level since March. Strong resistance is likely to be encountered again at this level.
The second point to note is that the uptrend on the three-line breakout chart becomes invalid. This can happen when a new red line forms and prices re-enter the channel. Failed breakouts can lead to deeper price declines, which are usually observed in late September.
Stay tuned for new information.
