With apologies, the World Cup games have led to a delay in publication. Believe in the USA! Today’s post go to all paid and free subscribers in Celebration of the World Cup and the July 4th.
Welcome to this week’s publication of the Market’s Compass Crypto Sweet Sixteen Study #249. 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.
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.
In a sharp reversal The Sweet Sixteen Total Technical Ranking rose 74.44% to 310 last week from 178 which was the lowest SSTTR reading since March 27th when it logged a 158 low.
Last week fifteen of the Sweet Sixteen TRs gained ground (eight TRs were up double-digits), none fell, and one was unchanged. One of the Crypto Currency TRs reentered the “green zone” (TRs between 35 and 50), ten ended the week in the “blue zone” (TRs between 15.5 and 34.5), seven reentered the “blue zone”) and five finished in the “red zone” (TRs between 0 and 15). That was vs. the previous week when there were four in the “blue zone” and twelve were in “red zone”. The average TR gain on the week was +8.28, in impressive technical reversal in the Technical Rankings of the Sweet Sixteen, vs. the previous week’s average TR loss of -3.28 and an average TR gain of +1.19 three weeks ago.
*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.
Once again Tron’s (TRX) 13-Week TR SMA of its Technical Ranking has continued to fall, it nevertheless remains at a level that continues to outpace the rest of the Sweet Sixteen TR SMAs. Stellar’s (XLM) 13-Week TR SMA has been rising since its late March pullback. Cosmos (ATOM) 13-Week TR SMA has fallen off, albeit it’s only a one week drop.
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.
Over the past two weeks, has made a three Quadrant move by rising out of the Lagging Quadrant through the Improving Quadrant (gathering a Relative Strength Momentum pace early last week) and it entered the Leading Quadrant late last week. Uniswap (UNI) started to lose Relative Strength Momentum two weeks ago but not before logging the best Relative Strength Ratio a week ago, last Thursday, at 112. That said it began to lose Relative Strength Momentum at a “clip” (note the distance between the daily nodes) and early last week it fell into the Weakening Quadrant. After exiting the Improving Quadrant Solana (SOL) has been “chugging” sideways notching improving Relative Strength along the way, and at the end of last week it registered the best Relative Strength Ratio, at 108.87 (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 June 26th to Friday July 3rd
Over the past seven day sall of the Sweet Sixteen gained absolute ground, vs. the week before when only two of the Sweet Sixteen gained absolute ground with fourteen of the cryptos trading lower. Last week, in a complete reversal, the average absolute percentage gain was +7.16% vs the previous week when the average absolute loss was -6.13%. Both weekly average gains exclude the two Indexes.
The Average YTD Absolute % Price Change of The Sweet Sixteen at the end of last week was -30.74%. That was vs. the week before when the Average YTD % Price Change was -34.42% with only Tron (TRX) up on the year. It is now joined by a small degree (+1.68%) by Stellar (XLM).
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” rose last week to a slightly short-term overbought condition of 86.62% or 97 out of a possible 112 from 25.89% or 29 the previous week but remained above deeply oversold reading of 4.46% or 5 out of a possible 112 five 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 seven of the TCFs registered an increase and only one logged a decrease, confirming the broader WoW strength in the Crypto Currency market.
*The “TSSTCF” Oscillator tallies the eight objective Technical Condition Factors into one overbought / oversold indicator that ranges between 0 and 8.
At the request of my readers I have shortened the time frame of the Weekly Chart for clarity purposes to three years. That said I still recommend that all of the four Market’s Compass Studies are read and viewed on a tablet or desktop.
Weekly price support at the 9,295.00 level in the CCi30 Index continues to cradle prices during the four-week price pattern. Short term negative price momentum appears to be slowing but the Stochastic Momentum Index remains below its signal line but has avoided a new low. MACD is holding support at its signal line. The Total Sweet Sixteen Technical Condition Factor has begun to move away from oversold territory and is back above both moving averages. These are all possibly positive technical features but the outcome on the Weekly Chart remains an open question with the Weekly trend getting the last word. The Daily chart that follows tells a more convincing positive technical picture, but multiple time frames have must be in gear to suggest that the nadir has been reached.
The downtrend that was marked by my inserted Standard Pitchfork (gold P1-P3), that I added when prices fell from the failure to attempt to trade back above the Tenkan Plot (red line) and impulsively move lower that followed. It was conclusively overtaken on Wednesday of last week when the index closed above the Upper Parallrel (solid gold line) of the Standard Pitchfork. Prices accelerated higher at the end of last week as the Index overtook both the Upper Warning Line (gold dashed line marked UWL1) and the second Upper Warning Line (gold dashed line marked UL2). On Friday prices edged and closed above the Tekan Plot. The Daily Stochastic Momentum Index has made a sharp turn above its signal line avoiding a lower low. MACD has retaken the ground above its signal line but remains in negative territory. The third Momentum indicator, my Sweet Sixteen Daily Momentum / Breadth Oscillator (lower panel) has kicked itself above both moving averages and above a clearly defined downtrend (gold dashed line). All of these technical features add up to a short-term important technical turn.
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.
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