With apologies, the World Cup games have led once again to a delay in publication.
Welcome to this week’s publication of the Market’s Compass Crypto Sweet Sixteen Study #250. 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.
The Sweet Sixteen Total Technical Ranking edged higher, up +.0.64% to 312 last week from 310.5 at the end of the previous which was a 74.44% gain from the reading three weeks ago of 178 which was the lowest SSTTR reading since March 27th when it logged a 158 low.
Last week nine of the Sweet Sixteen TRs gained ground, one was unchanged. and six fell. Eleven of the Crypto Currency TRs ended the week in the “blue zone” (TRs between 15.5 and 34.5) and five finished in the “red zone” (TRs between 0 and 15). That was vs. the previous week when there was one of the Sweet Sixteen in the “green zone” (TRs between 35 and 50), ten were in the “blue zone” and five were in “red zone”. The average TR gain on the week was a de minimis +0.03, vs. the previous week’s impressive technical reversal in the average TR gain of +8.28, vs. the previous week’s average TR loss of -3.28.
*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.
Tron’s (TRX) 13-Week TR SMA of its Technical Ranking has continued to fall (albeit at a slower rate), it nevertheless remains at a level that is hands above the rest of the Sweet Sixteen TR SMAs. Stellar’s (XLM) 13-Week TR SMA continues its climb despite the 10 “handle” TR draw down on the week (see the previous panel) which affirms the theory of tracking the SMA trends that removes the volatility in the weekly changes in TRs.
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.
Solana (SOL) rolled over in the Leading quadrant over the holiday lengthened weekend and started to lose Relative Strength Momentum and fell at a “clip” (note the distance between the daily nodes) into the Weakening Quadrant at the end of last week. That said, it still logged the highest Relative Strength Ratio at Fridays close at 108.8, but down from 109.90 midweek. Avalanche (AVAX) marked a three Quadrant move over the past two weeks after exhibiting noteworthy Relative Strength Momentum as it left the Improving Quadrant two weeks ago it climbed into the Leading Quadrant before it rolled over last weekend displaying negative momentum and at weeks end, it fell into the Weakening Quadrant. Cardano (ADA) has registered an improving Relative Strength Ratio three weeks in a row (see the Tabulation Table below) but has lost a measure of Relative Strength Momentum over the past week. Cosmos (ATOM) had been tracking lower, losing both Relative Strength and Relative Strength Momentum in the Lagging Quadrant until it hooked higher early last week.
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 3rd to Friday July 10th
Over the past seven days six of the Sweet Sixteen gained absolute ground and ten cryptos traded lower vs. the week before when all the Sweet Sixteen gained absolute ground. Last week the average absolute percentage loss was -0.35% vs the previous week when the average absolute gain was +7.16%. 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 -31.29% with only Tron (TRX) up on the year. That was vs. the week before when the Average YTD % Price Change was -30.79%.
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 last week to a to75.89% or 85 out of a possible 112 from a slightly short-term overbought condition of 86.62% or 97 out of a possible 112 the previous week but remained above deeply oversold reading of 4.46% or 5 out of a possible 112 six 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.
On a Weekly closing basis, the CCi30 Index continues to trade in a five-week sideways trading pattern between key support at the Median Line (violet dotted line) of the shorter-term Schiff Pitchfork (violet P1 through P3) and the key price support at the 9,295.00 level and price resistance at 10,200.00 level. The 8-Week Stochastic Momentum Index has started to hook higher and is approaching its signal line. Longer-term MACD avoided a violation of its signal line but remains in negative territory. After avoiding a lower low, The Total Technical Crypto Condition Factor remains above both moving averages with the 5-Week EMA (red line) crossing above the slightly rising 21-Week SMA (blue line). These technical features might offer a source of budding optimism to the crypto bulls that hope a bottoming process is unfolding and that there may be a light at the end of the tunnel. More on the Daily Chart below.
Monday’s long-legged Doji Candlestick and the two days of pullback that followed led me to draw two new Pitchforks. The Lower Parallel of the shorter-term Schiff Modified Pitchfork (gold P1-P3) and the Median Line (violet dotted line) of the longer-term Pitchfork offered a good measure of price support and on Friday prices closed just back above the Kijun Plot at the 9,808.40 level. The 8-Day Stochastic Momentum Index rolled over from over bought territory and is starting to track lower but MACD continues to track higher above its signal line, albeit it remains in negative territory. The Sweet Sixteen Momentum / Breadth Oscillator fell from a higher high but has turned up from a higher low. I now mark key first support at the P3 price pivot low at 9,470 that needs to hold for the technical argument that the July 1st low marked the nadir of the 3-month correction to be valid.
