Why Bitcoin Could Hit a New All-Time High Above $73,000

Author: Omkar Godbole, CoinDesk; Compiler: Wuzhu, Golden Finance

Summary

• BTC’s “three-line breakout chart” suggests a bullish resolution to a seven-month corrective trend and is on track for a new all-time high.

• Candlestick chart shows resistance around $70,000.

Traders focused on Bitcoin’s (BTC) daily candlestick chart may be bored as the price remains locked in a long-term directionless channel despite Monday’s gains. However, a less-tracked “three-line breakout chart” now suggests a bullish outlook favors a new all-time high.

The leading cryptocurrency by market value rose more than 5% to $66,000, its biggest one-day gain since Aug. 23, according to CoinDesk Indices.

Nevertheless, the daily candlestick chart suggests a neutral outlook as BTC remains trapped within a seven-month-long corrective descending channel defined by a trendline connecting highs reached in March and June, and lows set in May and July.

However, the three-line breakout chart shows that a breakout from the long-term descending channel occurred on Monday and the broader uptrend from the October 2023 lows near $30,000 has resumed. A bull victory could lead to new highs above $73,000.

The three-line breakout chart may look like a candlestick chart but focuses on price movement and trend changes while ignoring time, helping traders filter out erratic price movements and noise while judging current trends and potential trend reversals.

“A Japanese trader described the three-line breakout chart as a more subtle form of point and figure charting, in which reversals are determined by the market rather than by arbitrary rules, which means we can tune them to the strength and dynamism of the market,” says chartered market technician Steve Nison in his book, Beyond Candlestick Charts.

The line breakout chart consists of vertical blocks called lines or bars (green and red). A bullish reversal occurs when price is above the highest of the last three red lines, indicated by a new lineup (green bar). A new red line appears when price breaks below the lowest of the first three green lines (bearish reversal).

A bullish continuation occurs when price is above the previous green line, confirming the continuation of an already established uptrend. That’s exactly what happened on Monday, with the green bar slicing the trendline of the March and April highs, as shown below.

BTC's line breakout and candlestick chart. (TradingView)

While the breakout on the line breakout chart suggests that the rally is expected to set new highs, traders should pay attention to two things, the first is the candlestick chart, which shows that bulls have not been able to hold above $70,000 since March. The price may encounter strong resistance near this level again.

The second thing to note is the bullish invalidation on the line breakout chart, represented by the new red bar, pulling the price back inside the channel. Failed breakouts usually lead to further price declines, as observed in late September.