According to CoinDesk, Bitcoin’s three-line break chart indicates that the cryptocurrency may be on the verge of breaking free from a seven-month-long corrective trend, setting the stage for a potential rally to record highs. While Bitcoin’s daily candlestick chart remains trapped within a descending channel, the three-line break chart offers bullish signals that point to further gains.
Bitcoin Rallies to $66K, Eyeing New Highs
Bitcoin surged 5% to $66,000 on Monday, marking its largest single-day gain since August 23, according to CoinDesk Indices data. This rally highlights growing bullish momentum, although the daily candlestick chart shows Bitcoin trading within a descending channel, bounded by highs from March and June and lows from May and July.
Three-Line Break Chart Confirms Bullish Breakout
The three-line break chart, which tracks price movements and trend changes while filtering out short-term noise, has indicated a breakout from the descending channel that started in October 2023 near the $30,000 mark. This breakout suggests the broader uptrend may resume, potentially driving Bitcoin’s price beyond $73,000.
How the Three-Line Break Chart Works:
Bullish Reversal: A new green bar appears when the price surpasses the highest point of the last three red lines, signalling a potential trend reversal.
Bearish Reversal: A new red line is drawn when the price falls below the lowest point of the previous three green bars.
Bullish Continuation: If the price rises above the previous green line, the uptrend extends—this occurred on Monday, as Bitcoin's green bar cut through the trendline off the March and April highs.
Potential Resistance and Risks to Watch
Despite the bullish outlook, traders should remain cautious of two key factors:
Resistance at $70,000: Bitcoin has struggled to maintain a foothold above $70K since March, indicating strong resistance at this level.
Risk of a Failed Breakout: If a new red bar appears on the three-line break chart, Bitcoin could fall back inside the descending channel, invalidating the bullish signal. Failed breakouts, like those in late September, often result in deeper corrections.
Bullish Breakout on the Horizon?
The three-line break chart offers a promising signal for Bitcoin, suggesting the potential for a rally to new highs above $73,000. However, traders must remain vigilant of resistance at $70,000 and watch for signs of a failed breakout. If the bullish momentum holds, Bitcoin could exit its lengthy consolidation phase and enter a strong uptrend toward record levels.
