CoinDesk Report:
Author: Omkar Godbole, CoinDesk; Translator: Wuzhu
Summary:
BTC’s “Triple Line Break Chart” indicates that the seven-month corrective trend has been bullish resolved and is expected to reach a new all-time high.
The candlestick chart shows resistance around $70,000.
Traders focusing on the daily candlestick chart of Bitcoin (BTC) may feel bored as the price remains locked in a long-term sideways channel despite Monday’s uptick. However, a less-followed “Triple Line Break Chart” now suggests bullish prospects for a new all-time high.
According to CoinDesk Indices data, the leading cryptocurrency rose over 5% to $66,000 in terms of market capitalization, marking the largest single-day gain since August 23.
Nevertheless, the daily candlestick chart indicates a neutral outlook as BTC remains trapped within a seven-month corrective downtrend, which is defined by the trendlines connecting the highs reached in March and June and the lows set in May and July.
However, the Triple Line Break Chart shows that the breakout of the long-term downtrend occurred on Monday, and the larger uptrend from the October 2023 low around $30,000 has been restored. A bullish victory could lead to a new high above $73,000.
The Triple Line Break Chart may resemble a candlestick chart but focuses on price movements and trend changes while disregarding time, helping traders filter out volatile price movements and noise while assessing the current trend and potential trend reversals.
“A Japanese trader described the Triple Line Break Chart as a more subtle form of point-and-figure charting, where the reversals are determined by the market rather than arbitrary rules, which means we can adjust it to the strength and vigor of the market,” said Chartered Market Technician Steve Nison in his book “Beyond Candlesticks.”
The Line Break Chart is composed of vertical blocks called lines or bars (green and red). A bullish reversal occurs when the price surpasses the high of the last three red lines, represented by a new lineup (green bar). A bearish reversal occurs when the price falls below the low of the previous three green lines, resulting in a new red line (bearish reversal).
A bullish continuation occurs when the price exceeds the previous green line, confirming the continuation of the established uptrend. This is exactly what happened on Monday, as the green bar sliced through the trendline of the highs in March and April, as shown below.
Line Break and Candlestick Chart of BTC. (TradingView)
While the breakout on the Line Break Chart suggests a potential new high for the rebound, traders should note two things. First is the candlestick chart, which shows that bulls have failed to hold above $70,000 since March. The price may encounter strong resistance near that level again.
The second thing to note is the bullish failure on the Line Break Chart, represented by a new red bar that pulls the price back into the channel.
Failed breakouts often lead to further declines in price, as observed at the end of September.