Author: Omkar Godbole, CoinDesk; Compiled by Five Baht, Golden Finance

summary

• BTC's “three-tier breakout chart” indicates that the seven-month corrective trend has been resolved bullishly and is expected to reach a new all-time high.

• candle chartIt shows resistance around $70,000.

Traders who focus on the Bitcoin (BTC) daily candle chart are likely to get bored as the price is locked in a long-term directionless channel despite Monday's rise. However, a less-tracked “three-tier breakout chart” now suggests that a bullish outlook favors a record high.

According to CoinDesk Indices, the leading cryptocurrency rose more than 5% to $66,000 by market cap, the biggest one-day gain since August 23.

Despite this, the daily candlestick chart indicates a neutral outlook, as BTC remains stuck in a seven-month revised downward channel determined by a trend line connecting the highs reached in March and June and the lows set in May and July.

However, the three-tier breakout chart shows that the break in the long-term downward channel occurred on Monday, and a wider upward trend around the October 2023 low of $30,000 has resumed. A bull market win could lead to a new high above $73,000.

A three-line breakout chart may look like a candlestick chart, but it focuses on price changes and trend changes, ignoring time, to help traders filter out unstable price movements and noise while determining current trends and potential trend reversals.

“A Japanese trader described the three-line breakout chart as a more subtle form of point chart where reversals are determined by the market rather than arbitrary rules, which means we can adjust it to the strength and vitality of the market,” Chartered Markets Technician Steve Neeson said in his book “Beyond the Candlestick Chart.”

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

A bullish continuation occurs when the price is above the previous green line, confirming the continuation of the established upward trend. This is exactly what happened on Monday, when the green bar cut the trend line from the March and April highs, as shown below.

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

Although the breakout on the breakout line chart indicates that the rebound is expected to reach a new high, traders should look out for two things. The first is the candlestick chart, which shows that bulls have not been able to stabilize above $70,000 since March. The price is likely to once again encounter strong resistance near this level.

The second thing to note is that the bullish failure on the line breakout chart is indicated by a new red bar, pulling the price back into the channel. A failed breakout usually causes the price to drop further, as was observed at the end of September.