This Chart Indicates Bitcoin (BTC) May Be Headed for Record Highs Above $73K

The "three-line break" chart, which filters out noise and erratic price movements, suggests the broader bull run has begun.

Bitcoin price may be headed for a record-breaking rally to highs above $73,000, as indicated by a key technical chart.

The "three-line break" chart, which filters out noise and erratic price movements, suggests that Monday's breakout of a seven-month descending channel has set the stage for a bull run to new peaks.

Bitcoin price rose over 5% to $66,000 on Monday, registering its biggest single-day gain in seven weeks. However, the daily candlesticks chart shows a neutral outlook, with BTC remaining within a seven-month corrective descending channel.

But a lesser-tracked "three-line break" chart now suggests a bullish outlook favoring a move to record highs.

Bitcoin three-line break chart suggests bullish breakout

The three-line break chart, also known as a "Renko" or "brick" chart, might look like the candlesticks chart but it focuses on price movements and changes in trend, helping traders gauge the ongoing trend and potential trend reversals.

A bullish reversal, represented by a new lineup (green bar), happens when the price moves higher than the highest point of the last three red lines. A new red line (bearish reversal) occurs when the price moves below the lowest point for the previous three green lines.

A bullish continuation occurs when the price moves above the previous green line, confirming an extension of the already-established uptrend. That's precisely what happened on Monday, with the green bar cutting through the trendline off March and April highs, as seen below.

Bitcoin price three-line break chart

Two things traders should watch

While the breakout on the line break chart indicates the scope for a rally to new peaks, traders should be watchful of two things, the first being the candlestick chart, which shows bulls have consistently failed to secure a foothold above $70,000 since March. Prices could again encounter stiff resistance around that level.

The second thing to watch out for is 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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