Touchscreen technology plays an important role in the booming mobile devices market. Traditional touchscreen only provides 2D interactions with limited user experience. To overcome these limitations, we propose a novel 3D touch sensing system called the Airtouch system, which can recognize the movement of the finger in a 3-dimensional space. Half of the manufacturing cost is reduced by applying only single layer electrodes in the touch panel design. Moreover, an oscillator based correlated double sampling circuit is implemented as the self-capacitive sensor with bootstrapping technique to reduce inter-channel-coupling effect. Additionally, new algorithm for finger positioning is created with grouping filter invented to reduce system background noise. The demonstrated setup can successfully detect finger movement within a vertical range of 6cm and achieve a horizontal resolution up to 1cm. This system offers great potential in both gesture recognition for small-sized electronics, and advanced human interactive games for TV and mobile device.