Welcome to this week’s publication of the Market’s Compass Crypto Sweet Sixteen Study #252. The Study tracks the technical condition of sixteen of the larger market cap cryptocurrencies. Every week the Studies will highlight the technical changes of the 16 cryptocurrencies that I track as well as highlights on noteworthy moves in individual Cryptocurrencies and Indexes. Past publications including the Weekly ETF Studies can be accessed by paid subscribers via The Market’s Compass Substack Blog.
The Market’s Compass Technical View is a reader-supported publication. To receive new posts and support my work please consider becoming a paid subscriber.
An explanation of my objective Individual Technical Rankings and Sweet Sixteen Total Technical Ranking go to www.themarketscompass.com. Then go to the MC’s Technical Indicators and select “crypto sweet 16”. What follows is a Cliff Notes version* of the full explanation…
*The technical ranking system is a quantitative approach that utilizes multiple technical considerations that include but are not limited to trend, momentum, measurements of accumulation/distribution and relative strength. The TR of each individual Cryptocurrency can range from 0 to 50. The Sweet Sixteen Total Technical Ranking or “SSTTR” is the sum of the sixteen individual TRs and can be viewed as an overbought / oversold indicator as well as a confirmation / non-confirmation indicator.
The Sweet Sixteen Total Technical Ranking slipped lower for the third week in a row, down -3.07% to 286.5 from 297.5 at the end of the previous week, but nonetheless still far above the reading five weeks ago of 178.
In an even split last week eight of the Sweet Sixteen TRs gained ground, and eight fell. Ten of the Crypto Currency TRs ended the week in the “blue zone” (TRs between 15.5 and 34.5) and six finished in the “red zone” (TRs between 0 and 15). That was vs. the previous week when there was also ten were in the “blue zone” and six were in “red zone”. The average TR loss on the week was -0.60 vs. an average TR loss of -0.94 the week before.
*The 13-Week Simple Moving Average (SMA) lines smooths what can be “choppy” Objective Technical Rankings and better defines the trend in the TRs. Changes in the SMA trends with follow-through are signals worthy of technical note.
Cardano’s (ADA)13-Week TR SMA of its Technical Ranking continues to rise from its mid-June low. The balance of the Sweet Sixteen 13-Week TR Moving Averages either continued to fall or flatlined at the end of last week.
Relative Strength and Weakness in the Sweet Sixteen vs. The CCi30 Index* utilizing a Relative Rotation Graph
The Relative Rotation Graph, commonly referred to as RRGs, was developed in 2004-2005 by Julius de Kempenaer. These charts are a unique visualization tool for relative strength analysis. Chartists can use RRGs to analyze the relative strength trends of several securities against a common benchmark, (in this case the CCi30 Index*) and against each other over any given period (in the case below, daily) over the past two weeks. The power of RRG is its ability to plot relative performance on one graph and show true rotation. All RRGs charts use four quadrants to define the four phases of a relative trend. The Optuma RRG charts rotates from Leading (in green) to Weakening (in yellow) to Lagging (in pink) to Improving (in blue) and back to Leading (in green). True rotations can be seen as securities move from one quadrant to the other over time. This is only a brief explanation of how to interpret RRG charts. To learn more, see the postscripts and links at the end of this Blog.
*The CCi30 Index is a registered trademark and was created and is maintained by an independent team of mathematicians, quants and fund managers lead by Igor Rivin. It is a rules-based index designed to objectively measure the overall growth, daily and long-term movement of the blockchain sector. It does so by indexing the 30 largest cryptocurrencies by market capitalization, excluding stable coins (more details can be found at CCi30.com).
The chart below has two weeks, or 14 days, of relative data points vs. the benchmark, deliniated by the dots or nodes. Not all of the Sweet Sixteen are plotted in this RRG Chart. I have done this for clarity purposes. Those which I believe are of higher technical interest remain.
Cardano (ADA) has made a four quadrant move over the past two weeks. After falling out of the Leading Quadrant two weeks ago at an accelerating rate in downside Relative Strength Momentum through the Weakening Quadrant (note the distance between the daily nodes) it began to hook higher as it entered the Lagging Quadrant. Late last week it edged back into the Leading Quadrant. Solana (SOL) also exhibited negative Relative Strength Momentum two weeks ago through the Weaking Quadrant at a pace before turning higher in the Lagging Quadrant last week. ChainLink (LINK) had been rising constructively in the Improving Quadrant until it began to roll over at the end of last week. Although Ethereum (ETH) has not displayed noteworthy Relative Strength Momentum over the past two weeks it registered the highest Relative Strength Ratio of the Sweet Sixteen at the end of the week (see the Tabulation Table below).
The “Tabulation Table” below marks the Relative Strength and Relative Strength Momentum readings of the Sweet Sixteen vs. the CCi30 Index at the end of last week and the end of the two preceding weeks. If there has been an improvement in either the Relative Strength Ratio or the Relative Strength Momentum reading since the end of the preceding week, I have highlighted it in green. If there has been a contraction in either it is highlighted in red and an unchanged reading in either will remain black. The color-coding system has served as a heat map over the past three weeks highlighting either the continued improvement, deterioration, or stasis vs. the benchmark CCi30 Index. The crypto currencies that are in the comments below the RRG chart are highlighted in blue.
*Friday July 17th to Friday July 24th
Over the past seven days seven of the Sweet Sixteen gained absolute ground and nine cryptos traded lower vs. the week before when six were up and ten were down on an absolute basis. Last week the average absolute percentage loss was -1.60% vs the previous week when the average absolute loss was -0.57% and three weeks ago when the average absolute loss was -0.35%. Both weekly average losses exclude the two Indexes.
The Average YTD Absolute % Price Change of The Sweet Sixteen at the end of last week was -32.85% with Tron (TRX) still the only one up on an absolute basis since the start of the year. That was vs. the week before when the Average YTD % Price Change was -31.78%.
The Technical Condition Factors or TCFs are utilized in the calculation of the Individual Crypto Currencies Technical Rankings. What is shown in the excel panel below is the total TCFs of all sixteen TRs. A few TCFs carry more weight than the others, such as the Weekly Trend Factor and the Weekly Momentum Factor in compiling each individual TR of each of the 16 Cryptocurrencies. Because of that, the excel sheet below calculates each factor’s weekly reading as a percentage of the possible total.
A full explanation of my Technical Condition Factors go to www.themarketscompass.com. Then go to the MC’s Technical Indicators and select Crypto Sweet 16.
The Daily Momentum Technical Condition Factor or “DMTCF” fell for the fourth week in a row to 48.21% or 54 out of a possible 112 from 63.75% two weeks ago.
As a confirmation tool, if all eight TCFs improve on a week over week basis, more of the 16 Cryptocurrencies are improving internally on a technical basis, confirming a broader market move higher (think of an advance/decline calculation). Conversely, if more of the TCFs fall on a week over week basis, more of the “Cryptos” are deteriorating on a technical basis confirming the broader market move lower. At the end of last week four of the TCFs registered an increase, three logged a decrease and one was unchanged.
*The “TSSTCF” Oscillator tallies the eight objective Technical Condition Factors into one overbought / oversold indicator that ranges between 0 and 8
For seven weeks in a row the CCi30 Index has traded in a 900-point sideways trading range. That said, it has managed to hold key price support at 9,295.00 and the Median Line (violet dashed line) of the shorter-term Schiff Pitchfork (violet P1-P3) on a Weekly closing basis. The 8-Week Stochastic Momentum Index bottomed before reaching a deeply oversold condition and has turned back above its signal line albeit not with marked flourish. MACD continues to track quietly higher riding above its signal line, but the Sweet Sixteen Total Technical Condition Factor is teetering on moving average support. All these technical features add up to confirm the directionless price action since the early June down draft in the index giving nary a hint of whether the price action is bottoming or simply distribution before a resumption of the downtrend.
For readers who are unfamiliar with the technical terms or tools referred to in the comments on the technical condition of the CCi30 Index can avail themselves of a brief tutorial titled, Tools of Technical Analysis and the three part Andrews Pitchfork Series available on my website.
Charts are courtesy of Optuma whose charting software allows the Technical Rankings to be calculated and back tested.
Be the first to comment