Welcome to this week’s publication of the Market’s Compass Crypto Sweet Sixteen Study #230. 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. As always, paid subscribers will receive this week’s unabridged Market’s Compass Crypto Sweet Sixteen Study sent to their registered email Sundays. 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.
Last week the SSTTR rose 38.59% to 215.5 from 155.5, which was a 5.07% rise from the previous week’s reading. The SSTTR has risen three weeks in a row after a reading of 84.5 four weeks ago which was the lowest oversold reading in 3 1/2 years marking a confirmation of the Sweet Sixteen Crypto Currency lows.
Last week fourteen TRs rose, one was unchanged and only one fell in a general improvement of the individual technical condition of the Sweet Sixteen. The week before, seven TRs rose, three were unchanged and six fell. Last week the average Sweet Sixteen TR gain was +3.75, adding to the previous week’s average TR gain of +0.47. For the tenth week in a row there have been zero TRs in the “green zone” (TRs between 35 and 50).
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.
After a brief loss of Relative Strength Momentum a week ago into the early part of last week, Cosmos (ATOM) regained its footing and started to climb again in the Leading Quadrant registering not only the best Relative Ratio vs. the CCi30 Index of the Sweet Sixteen at 112.70 at the end of last week (see the Tabulation Table below) but also the best individual Technical Ranking at 30.5. Tron (TRX) fell into the Weakening Quadrant last week losing Relative Strength Momentum but nonetheless it still had the second best Relative Strength Ratio at the end of the week. Polygon (POL) had been rising sharply in the Improving Quadrant two weeks ago exhibiting strong Relative Strength Momentum until, like ATOM, it began to lose that Momentum until it regained traction early last week and began to rise again in the Leading Quadrant. Solana (SOL) has left the Lagging Quadrant behind and is rising in the Improving Quadrant.
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 two preceding weeks. If there has been an improvement in either the Relative Strength Ratio or the Relative Strength Momentum reading since 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 February 13th to Friday February 20th
Last week thirteen of the Sweet Sixteen marked absolute gains and three lost absolute ground. The previous week, twelve of the Crypto Currencies we track in the Study lost ground on an absolute basis and gained absolute ground. Both Cosmos (ATOM) and Polygon (POL) added to the gains from the previous week (+6.85% and +4.45% respectively). Last week the average absolute percentage gain was +1.78% vs. the week before when the average absolute loss was -0.91%. Both weekly average moves exclude the two Indexes.
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 81.25% or 91 out of a possible 112. That was the third week in a row that DMTCF rose from 0 out of a possible 112 four weeks ago. That “zero” reading was the first time that the Daily Momentum Factor ever reached that extreme of an oversold condition since I began tracking the Technical Condition Factors in September 2022.
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. Last week six TCFs moved higher, and two TCFs fell.
*The “TSSTCF” Oscillator tallies the eight objective Technical Condition Factors into one overbought / oversold indicator that ranges between 0 and 8.
Three weeks ago, the CCi30 Index broke below price support afforded by the January 2024 and August 2024 intra-week lows at 11,200.00 but found support at the Median Line (gold dotted line) of the Standard Pitchfork (gold P1 through P3) and by the end of week it retook the ground back above 11,200.00. For the past two weeks the index has traded in a tight range and has held that key price support level The 8-Week Stochastic Momentum Index is still falling below its signal line (center panel) and is heading back to oversold territory. The Total Technical Condition Crypto Factor Oscillator has recovered from the oversold lows four weeks ago and has edged out of oversold territory and has overtaken the shorter-term 5-Week Moving Average (red line). I would need to see it climb back above the longer-term Moving Average in a definitive way and overtake the January highs in the oscillator in concert with prices rallying above first price resistance at the 12,380 to declare that the index is “out of the woods”.
The Daily Chart of CCi30 Index further demonstrates the tight sideways trading range that the index has been in for the better part of two weeks since it rose from the 9,305.38 level. MACD has risen back above its signal line but remains in negative territory and the shorter-term Stochastic Momentum Index has rolled over through its signal line and is tracking lower. There is one positive technical feature and that’s the Sweet Sixteen Daily Momentum /Breadth. It pulled back late last week but held moving average support. Only a rally back above the Kijun Plot and price resistance at 12,180.00 would allow me to say that price action over the past two weeks is consolidation and not distribution.
*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 an in-depth comprehensive lesson on Pitchforks is available on my website…
Charts are courtesy of Optuma whose charting software allows the Technical Rankings to be calculated and back tested.
To receive a 30-day trial of Optuma charting software go to…
Charts are courtesy of Optuma whose charting software allows the Technical Rankings to be calculated and back tested.
To receive a 30-day trial of Optuma charting software go to…
