Welcome to this week’s edition of Market’s Compass Crypto Sweet Sixteen Research #231. The study tracks the technical condition of sixteen of the largest cryptocurrencies in the market. Each week the Research highlights technical changes in the 16 cryptocurrencies I track, as well as significant movements in individual Cryptocurrencies and Indices. As always, paid subscribers will receive Market’s Compass Crypto Sweet Sixteen unabridged study delivered to their registered email on Sundays. Past publications, including the Weekly ETF Study, can be accessed by paid subscribers via The Market’s Substack Compass blog.
Go to my target description, individual technical ratings, and overall sweet hex technical rating www.themarketscompass.com. Then go to MC Technical Indicators and select “crypto sweet 16”. That’s what the Cliff Notes version * is the full explanation…
*The technical rating system is a quantitative approach that uses multiple technical considerations including, but not limited to, trend, momentum, accumulation/distribution measurements, and relative strength. The TR of each individual Cryptocurrency can range from 0 to 50. The Sweet Sixteen Total Technical Rating or “SSTTR” is the sum of sixteen individual TRs and can be viewed as an overbought/oversold indicator as well as a confirmation/disconfirmation indicator.
Last week, SSTTR fell from 215.5 -7.89% to 198.5, which is 38.59% higher than the previous week’s reading. Before last week’s slight decline, the SSTTR had risen for three straight weeks after reading 84.5 five weeks ago, the lowest reading in 3 1/2 years.
Last week, eight TRs advanced, three remained unchanged and five declined. Last week, fourteen TRs rose, one remained unchanged and one fell. Last week’s average Sweet Sixteen TR loss was -1.06, giving back some of last week’s average TR gain of +3.75. At the end of last week, eleven TRs were in the “red zone” (TRs between 0 and 15) and five were in the “blue zone” (TRs between 15.5 and 34.5), three of which were out of the “red zone”. The twelfth week is when there is zero TR in the “green zone” (TRs from 35 to 50).
Relative rotation graphs, commonly called RRGs, were developed in 2004-2005 by Julius de Kempenaer. These charts are a unique visualization tool for relative strength analysis. Chartists can use RRG to analyze the relative trends of several securities against a common index, (in this case the CCi30 Index*) and against each other in 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 a graph and show the true trend. All RRG charts use four frames to define the four phases of the relative trend. The Optuma RRG charts cycle from leading (in green) to weak (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 another over time. This is just a brief overview of RRG charts. For more information, see the postscripts and links at the end of this Blog.
*CCi30 Index is a registered trademark and is developed and maintained by an independent team of mathematicians, quants and fund managers led 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 this by indexing the 30 largest cryptocurrencies by market capitalization, excluding stablecoins (more details can be found on this page. CCi30.com).
The chart below contains two weeks or 14 days of relative data points compared to the indicator, separated by dots or knots. Not all of the Sweet Sixteen are plotted on this RRG Chart. I did this for clarity. The ones I think are of more technical interest remain.
Just as Kosmos (ATOM) climbed to the leading frame three weeks ago, it fell into the weak quarter and at the end of last week the moment of relative strength accelerated (pay attention to the distance between the daily “nodes”. The ratio of strength to the CCi30 Index (see the table below) with a good measurement, the torque is increased, but this impulse is stopped.
The “Table” below shows relative strength and relative momentum readings for the Sweet Sixteen and the CCi30 Index over the past weekend and the previous two weeks. If there has been an improvement in relative strength or relative momentum readings since last week, I’ve highlighted it in green. If there is an abbreviation in either, it will be highlighted in red and will remain black in both readings. The color coding system has served as a heat map over the past three weeks, showing continued improvement, deterioration or stagnation compared to the CCi30 Index. Cryptocurrencies featured in the comments below the RRG chart are highlighted in blue.
*Friday February 20 to Friday February 27
Last week, three of the Sweet Sixteen recorded absolute gains and thirteen lost absolute ground. Last week, the opposite happened with the 13 cryptocurrencies we track in the study, with absolute gains and three absolute losses. After “closing” up +11.16% two weeks ago, Cosmos (ATOM) fell -21.51% last week. Last week, the average absolute percentage loss was -1.63% compared to the previous week, when the average absolute increase was +1.78%. Both weekly moving averages exclude the two Indices.
Technical condition factors or TCFs are used in the calculation of technical ratings of individual cryptocurrencies. What is shown in the Excel panel below is the sum of the TCFs of all sixteen TRs. A few TCFs carry more weight than others, such as the weekly trend factor and the weekly momentum factor when compiling each individual TR of each of the 16 cryptocurrencies. For this reason, the Excel sheet below calculates the weekly reading of the factor as a percentage of the total possible.
A full explanation of the factors of my technical situation goes to it www.themarketscompass.com. Then go to MC Technical Indicators and select Crypto Sweet 16.
The Daily Momentum Technical Condition Factor, or “DMTCF,” rose slightly last week to 83.93%, or 94 out of 112 possible. It was the third week in a row that the DMTCF rose from 0 to 112 five weeks ago. This “zero” reading was the first time the Daily Momentum factor reached this extreme oversold condition since I began tracking the technical condition factors in September 2022.
As a means of confirmation, if all eight TCFs improve on a weekly basis, most of the 16 Cryptocurrencies improve internally on a technical basis, confirming a broader market advance (think of an advance/decline calculation). Conversely, if a large number of TCFs fall on a weekly basis, most “Cryptos” will deteriorate on a technical basis, confirming a decline in the broader market. Last week only one TCF rose and seven TCF fell.
*The “TSSTCF” oscillator aggregates eight objective technical condition factors into a single overbought indicator that ranges from 0 to 8.
The only slightly positive technical feature regarding the price action of the CCi30 Index is that based on the closing of the week, the price support provided by the January 2024 and August 2024 weekly lows at 11,200.00 was held. Additionally, the 8-week Momentum Index continues to track lower below its signal line, and the Total Sweet Sixteen Condition Technology Oscillator remains in oversold territory at its 21-week moving average. Reiterating my opinion from last week, “I need to see it retrace firmly from the long-term moving average and rise to the January highs on the oscillator along with prices above the first price resistance at 12,380 to declare that the index is out of the woods.”
The daily chart of the CCi30 Index shows another narrow trading range, with the index above the 9,305.38 level for the better part of three weeks. The Kijun district (green line) has been making every effort to rally since the middle of January. MACD continues to track above its signal line, but remains in negative territory, and the Short-Term Stochastic Momentum Index has broken through its signal line above the lows, but it appears to have been at the end of last week. There is one positive technical feature and that is Momentum Sweet Sixteen Daily /Breadth. It retreated mid-week but found support at the rising 45-day exponential moving average (blue). My technical opinion remains the same, “only a rally above the Kijun area and price resistance at 12,180.00 allows me to say that the price action of the last two weeks is consolidation, not divergence”.
* For readers who are not familiar with the technical terms or tools mentioned in the CCi30 Index Technical Status comments, a short tutorial called “Pitchforks Technical Analysis Tools and In-Depth Tutorial” is available on my website…
www.themarketscompass.com
Charts are by Optuma, whose charting software allows technical ratings to be calculated and retested.
To get a 30-day trial of Optuma’s charting software, go to…
Charts are by Optuma, whose charting software allows technical ratings to be calculated and retested.
To get a 30-day trial of Optuma’s charting software, go to…
www.optuma.com/TMC
