Welcome to this week’s publication of the Market’s Compass Weekly Crypto Sweet Sixteen Study. The Study tracks the technical condition of sixteen of the larger market cap cryptocurrencies. I have compiled the historic quantitative objective technical ranking data and secondary technical indicators including the Sweet Sixteen Total Technical Rankings and Weekly Average Technical Ranking back to October of 2021. Every week the Studies will highlight the technical changes of the 16 cryptocurrencies that I track as well as individual highlights on noteworthy moves in certain cryptocurrencies and Indexes.
The Excel spreadsheet below indicates the weekly change in the objective Technical Ranking (“TR”) of each individual Cryptocurrency. The technical ranking or scoring system is an entirely quantitative approach that utilizes multiple technical considerations that include but are not limited to trend, momentum, measurements of accumulation/distribution and relative strength. If an individual Cryptocurrency’s technical condition improves the Technical Ranking (“TR”) rises, and conversely, if the technical condition continues to deteriorate, the TR falls. The TR of each individual Cryptocurrency can range from 0 to 50. The spreadsheet below also acts as a “heat map” in that, cryptocurrencies with a TR in the range of 1 to 15 are highlighted in red, 15.5 to 34.5 are noted in blue and TRs in the range of 35 to 50 are in green. The primary take-away from this spread sheet should be the trend of the individual TRs, either the continued improvement or deterioration, as well as a change in direction. A sustained trend change needs to unfold in the individual TRs for it to be actionable. Secondarily a very low ranking can signal an oversold condition and conversely a continued very high number can be viewed as an overbought condition but, as we know, over sold conditions can continue at apace and overbought securities that have exhibited extraordinary momentum can easily become more overbought. Thirdly, the weekly TRs are a valuable relative strength/weakness indicator vs. each other, in addition when the Sweet Sixteen Total Technical Ranking (“SSTTR”), that has a range of 0 to 800, is near the bottom of its range and an individual cryptocurrency has a TR that remains elevated it speaks to relative strength. Conversely if the SSTTR is near the top of its recent range and an individual cryptocurrency has a TR that remains mired at low levels it speaks to relative weakness. Lastly I view the objective Technical Rankings as a starting point in my analysis and it is not the entire “end game”.
This Week’s and 10 Week Trailing Technical Rankings of the 16 Individual Cryptocurrencies*
*Rankings are calculated up to the week ending Friday June 9th
The Sweet Sixteen Total Technical Ranking or SSTTR fell sharply last week from the previous week. The SSTTR fell to 206 from 374, marking a drop of -44.92%. That level, (206) was the lowest level registered since December of last year and largest WoW drop since in the SSTTR since November 11th when it fell -53.47% from the previous week. That said, aside from the sharp WoW deterioration in all but one of the Sweet Sixteen, there has been a slow worsening of the 16 individual TRs since the middle of April as revealed by the “heat map” feature embedded in the spread sheet.
On a Wow basis, all but one Cryptocurrency registered contractions in their objective TRs and only one marked a small gain, that was Ripple (XRP). The average TR loss was -10.5. Only XRP ended the week in the “green zone” (TR of between 35 and 50), five were in the “blue zone” (TRs between 15.5 and 34.5) and ten ended the week in the “red zone” (TRs between 1 and 15). The previous week there were three in the “green zone”, seven were in the “blue zone” and six were in the “red zone”. The largest drop in TR was registered by Cardano (ADA) whose TR fell by -23.5 “handles” to 10 from 33.5. The lower panel in the chart below reminds one that sharp drops and advances are not uncommon in the TR of ADA but as will be seen later in the Blog, ADA was down -21.92% Friday to Friday and it is quickly approaching the December lows.
Measurements of Relative Strength and Weakness in the Sweet Sixteen vs. The CCi30 Index*.
*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 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).
“What’s in Your Wallet?”
Even in a nasty week that saw the CCi30 Index drop -7.04% and my Sweet Sixteen Index fall -17.38% there were at least two cryptocurrencies that have continued to outperform on a relative basis. Both Ethereum (ETH) and Ripple (XRP) have continued to the place “to be” vs. either ADA or Binance (BNB) which has troubles of its own.
Seven Day Absolute % Price Change*
* Friday June 2nd to Friday June 9th
The Technical Condition Factor changes since the week ending May 19th
There are eight Technical Condition Factors (“TCFs”) that determine individual TR scores (0-50). Each of these 8, ask objective technical questions (see the spreadsheet posted above). If a technical question is positive an additional point is added to the individual TR. Conversely if the technical question is negative, it receives a “0”. 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 above calculates each factor’s weekly reading as a percent of the possible total. For example, there are 7 considerations (or questions) in the Daily Momentum Technical Condition Factor (“DMTCF”) of the 16 Cryptocurrencies ETFs (or 7 X 16) for a possible range of 0-112 if all 16 had fulfilled the DMTCF criteria the reading would be 112 or 100%.
Two weeks ago, for the week ending June 2nd, 91 of a possible total of 112 positive points or a 81.25% reading in the DMTCF was registered. Last week the DMTCF fell sharply to 15.18%, approaching an oversold condition.
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 all eight TCFs fell confirming the broad based weakness in the Crypto market.
The CCi30 Index with This Week’s Sweet Sixteen Total Technical Ranking “SSTTR” Overlaid
The Sweet Sixteen Total Technical Ranking (“SSTTR”) Indicator is a total of all 16 Cryptocurrency rankings and can be looked at as a confirmation/divergence indicator as well as an overbought / oversold indicator. As a confirmation/divergence tool: If the broader market as measured by the CCi30 Index continues to rally without a commensurate move or higher move in the SSTTR the continued rally in the CCi30 Index becomes increasingly in jeopardy. Conversely, if the CCi30 Index continues to print lower lows and there is little change or a building improvement in the SSTTR a positive divergence is registered. This is, in a fashion, is like a traditional A/D Line. As an overbought/oversold indicator: The closer the SSTTR gets to the 800 level (all 16 Cryptocurrencies having a TR of 50) “things can’t get much better technically” and a growing number individual Crypto’s have become “stretched” there is more of a chance of a pullback in the CCi30. On the flip side the closer to an extreme low “things can’t get much worse technically” and a growing number of Crypto’s are “washed out technically” and an oversold rally or measurable low is closer to being in place. The 13-week moving average in Red smooths the volatile SSTTR readings and analytically is a better indicator of trend.
In concert with the CCi30 Index breaking support at the Lower Parallel (solid gold line highlighted by the yellow circle) of the Schiff Modified Pitchfork (gold P1 through P3), the SSTTR fell to its lowest level since last December and is approaching oversold territory. That price drop gave birth to a second Pitchfork. In our three part series on Median Line Analysis or Andrews Pitchfork, my colleague Kyle Crystal and I coined this as a “Dueling Pitchforks”. The newly drawn second Pitchfork (purple P1 through P3) capped a rally attempt prior to last weeks price break. MACD reflects the loss of upside price momentum as it has fallen below its signal line and is re-entering negative territory. Regular readers of the Market’s Compass Crypto Sweet Sixteen Studies know that I have considered the price action in Index as a base building process. Despite last weeks break lower that technical thesis remains unchanged and only a break of the price swing low at 6,580 followed by a break of price support at gold P1 would have me rethink that technical theory.
The CCi30 Index Weekly Cloud Model with the Average Sweet Sixteen Technical Ranking (ASSTR)*
*The Average Sweet Sixteen Technical Ranking is the average of the individual TRs of the sixteen cryptocurrencies we track at the end of each week.
At the end of last week the CCi300 Index was teetering on support afforded by the Kijun Plot (green line) and the bottom of the Cloud model. The ASSTR has fallen to the lowest level since the turn of the year and the shorter-term 9-Week SMA is about to cross below the longer-term 45-Week EMA. That said when the ASSTR reaches a level of 15 or below it suggests an oversold condition is developing and a bounce in price can occur.
As can be seen in the Daily line chart of of the Sweet Sixteen Index below, support at the Median Line (red dotted line) of the Standard Pitchfork (red P1 through P3) is in jeopardy of being violated. Both MACD and my Sweet Sixteen Daily Momentum / Breadth Oscillator are beginning to become oversold but there has yet to be a hint of a positive a turn. Only then can we say a counter trend rally is unfolding.
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