According to CoinDesk, Bitcoin's three-line break chart suggests a bullish resolution of the seven-month-long corrective trend, indicating the potential for a move to record highs. Despite a recent rally, Bitcoin's daily candlesticks chart shows prices remain within a descending channel. However, the three-line break chart, which focuses on price movements and changes in trend while ignoring time, now suggests a bullish outlook.
The leading cryptocurrency by market value rose over 5% to $66,000, marking its biggest single-day gain since August 23, according to CoinDesk Indices data. The daily candlesticks chart indicates a neutral outlook, with Bitcoin trapped within a 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 occurred on Monday, resuming the broader uptrend from October 2023 lows near $30,000. This bullish signal could lead to record highs above $73,000. The three-line break chart helps traders filter out erratic price movements and noise while gauging ongoing trends and potential reversals.
A bullish reversal on the three-line break chart is represented by a new green bar when the price moves higher than the highest point of the last three red lines. Conversely, a new red line indicates a bearish reversal when the price moves below the lowest point of the previous three green lines. A bullish continuation occurs when the price moves above the previous green line, confirming an extension of the uptrend. This happened on Monday, with the green bar cutting through the trendline off March and April highs.
While the breakout on the line break chart suggests the potential for a rally to new peaks, traders should be cautious of two factors. First, the candlestick chart shows that bulls have consistently failed to secure a foothold above $70,000 since March, indicating possible resistance at that level. Second, traders should watch for 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.
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