Welcome to this week’s publication of the Market’s Compass Crypto Sweet Sixteen Study #235. 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.
At the end of last week the Sweet Sixteen Total Technical Ranking fell back 37.43% to the lower end of its recent range to 158 falling from a lower high of 252.5 the previous week.
Last week there was only one Crypto TR that was in the “green zone” (TRs between 35 and 50) from the “blue zone” (TRs between 15.5 and 34.5), that was Tron (TRX). The week before was the first time since October of last year that any or the Sweet Sixteen ended the week in the “green zone”. TRX has been in the “green zone” two weeks in a row. Only one of the Crypto TRs ended the week in the “blue zone” (TRs between 15.5 and 34.5) and fourteen were in the “red zone” (TRs between 0 and 15). That was vs. the week before when there were eight in the “blue zone”, seven were in the “red zone”. The average TR loss on the week was -5.91 vs. the week before when the TR Average registered a de minimis gain of +0.47.
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.
Tron (TRX) fell from the Leading Quadrant through the Weakening Quadrant and into the Lagging Quadrant two weeks ago but, a week ago last Wednesday TRX made a sharp U-turn and rose sharply, displaying improving Relative Strength Momentum as it entered the Leading Quadrant. As can be seen in the Tabulation Table below, at the end of last week TRX held the pole position with the best Relative Strength Ratio vs. the CCi30 Index at 103.83. Stellar (XLM) rose out of the Improving Quadrant and into the Leading Quadrant two weeks ago but rolled over (that said it never left the Leading Quadrant) until it turned higher again last Tuesday regaining Relative Strength Momentum and Relative Strength. Cosmos (ATOM) had been exhibiting outstanding Relative Strength Momentum (note the distance between the daily nodes) as it rose in the Improving Quadrant until early last week when it rolled over and began to fall.
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 March 20th to Friday March 27th
Last week only two of the Sweet Sixteen marked absolute gains (both are highlighted in the RRG discussion above) and fourteen lost absolute ground. The previous week, ten of the Sweet Sixteen marked absolute gains and six lost absolute ground. Last week the average absolute percentage loss was -6.71% (vs. -0.23 average percentage loss the week before) driven by a broad-based price pullback in the majority of the Sweet Sixteen. Both weekly average gains or losses 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.
For the third week in a row the Daily Momentum Technical Condition Factor or “DMTCF” fell last week to 18.75% or 21 out of a possible 112. That was a drop from the week before reading of 67.86% or 76 out of a possible 112 and 88.39% or 99 three 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. Last week seven TCFs fell and only one moved higher, confirming the generalized technical weakness in the Sweet Sixteen.
I feel I must start with the following…The Bain of my existence as a market’s technician is a range bound directionless market. The difficulty being that the question that arises is whether the price action is distribution prior to a resumption of the downtrend or is it a base building process. Where secondary technical tools may help give a clue, “only in price is there truth”.
Two weeks ago, the CCi30 Index began to break out of the multi-weeklong trading range but failed and fell back into the previous price range. That speaks of the suggestion that there are still sellers above the confines of the range. That said, key price support at the 10,200-level held during last week’s price pullback as it has on an intra-week basis since early February. One minor positive technical feature is that the 8-Week Stochastic Momentum Index turned at a higher low earlier this month and is still attempting to track higher above its signal line, but the Total Sweet Sixteen Technical Condition Factor Oscillator (lower panel) has dropped back below both its moving averages into oversold territory. Not much to “hang a bullish hat on” here! More on the Daily Chart that follows…
Two attempts to move above resistance into the Cloud Model have failed and prices have reversed and the index has moved back into the trading range. All three Daily secondary indicators confirm the price weakness that developed into the end of last week. MACD has rolled over below its signal line and has just entered negative territory. The shorter-term 8-Day Stochastic Momentum Index has responded by also falling back below its signal line. My Sweet Sixteen Daily Momentum /Breadth Oscillator made a valiant attempt to move back above both moving averages but failed and has reversed course. That brief bounce did little to change the directional trend in both 45-Day Exponential Moving Average (blue line) and the shorter-term 5-Day Moving Average (red line) of the Oscillator. Both smoothing averages are a better indication of the underlying trend in momentum and breadth. Key first support is at the bottom of “the box” or trading range at 9,830.00 and second support is at the February 6th intra-week low at 9,305.38. Both of which are looking increasingly likely to be tested.
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 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…
