2100NEWS Crypto Market Breadth Survey



Since the end of October, crypto markets have experienced significant changes which is a positive sign that we could be nearing the start of a bullish trend. The percent of DA above their 50-days EMA Breadth indicators are sloping up. A new uptrend was signaled on a break above the downtrend line.

Analysis of Market Direction… acumen knowing when to “hold ’em when to fold up, when to walk away and when to run. Timing is Everything!

*Breadth indicators are powerful technical analysis tools that gauge the direction of the market and help determine if it’s bullish, bearish or neutral. They offer a different perspective on the markets that can’t be seen through other indicators by analyzing the degree of participation in an advance or a decline to see whether or not an uptrend or downtrend is broad-based and therefore likely to continue. The 2100NEWS DA Factor Indexes were developed to show that different groups of Digital Assets behave differently in certain market conditions. Crypto Intermarket analysis is a branch of technical analysis that examines the correlations between four major factors: Coins, Tokens, Ehtereum based, and not Ethereum based Tokens. Chartists can use these relationships to identify the stage of the business cycle and improve their forecasting abilities. We use a combination of several methods and look for confluence and increase their odds.

However, crypto markets recover from a bearish summer. I’m confident we’ll see fresh cash entering the market. Bitcoin dominance had reached a 2019 high of around 70% during September 2019, then was dropping out of a multi-month formation. After the altcoin bloodshed of the current year, it seemed Bitcoin investors might be looking into diversifying with riskier assets. Since the beginning of September, the shy start of the ALT season had been showing for two weeks, Bitcoin was being sold to buy ALT coins,  the money was shifting towards specific altcoins. After four months of falling, the first signs of change began to emerge. Professional traders from traditional markets, who traded stocks and other financial instruments, also entered the market. Most of the movements, that are happening now, have already occurred with stocks. You may ask why? Because anything can change on the market, except for human psychology and the actions that people perform in a given situation. We need to know that analytical brutes, without the knowledge and understanding of financial markets, always predict the future in the direction of current market movements and also always wait for a whole series of confirmations and draw children’s drawings called patterns that predict catastrophe. For investor timing is everything. The survey below shows, the situation has started to change since the beginning of October, when a positive trend began to emerge within the larger negative, which is also clearly seen in the following three charts below, which represent the three types of the crypto market breadth indicators.

The percentage of DA trading above 50 days EMA

The chart below compares the percentage of DA trading above 50 days EMA for:

  1. 100 Large-caps members of NWSL100 (top box)
  2. 1100 members of NWST1100
  3. 100 Ethereum Tokens members of NWSET100
  4. 100 Coins members of NWSCo100 (bottom box)

over the last 10 months. All four A50R lines had risen above 30 signaling an end of a bearish trend on crypto markets. Large caps percentage of DA trading above 50 days EMA is nearly 70 (top box), which is on the edge (red area) that marks the start of the bullish trend.

*The percentage of digital assets trading above a specific moving average is a breadth indicator that measures internal strength or weakness in the underlying index. The 50-day moving average is used for the short-medium term timeframe. The percent of DA above their 50-days EMA is best suited for overbought and oversold levels. Because of its volatility, this indicator will move to overbought and oversold levels more often than the indicators based on longer moving averages. In general, readings above 70% are deemed overbought and readings below 30% are deemed oversold.

 

Looking at the chart below we can see AD Volume Line of Large-caps represented by Large Cap Index (NWSL100). The market is considered weak when the AD Volume Line moves to new lows along with the underlying index. This shows strong selling pressure. We can see on the charts, that selling pressure has been waning and the decline was nearing an end at the end of September. ADVL 10-day EMA line had changed the slope to positive three weeks later, then had crossed ADVL 25-day EMA and confirmed a rally.

 

*Looking at the breadth charts ADVP is a breadth statistic based on Net Advancing Volume, which is the volume of advancing digital assets less the volume of declining. Because it is based on volume, the AD Volume Line measures the buying and selling pressure behind an advance or a decline. The volume behind advancing Digital Assets represents buying pressure, while the volume behind declining Digital Assets represents selling pressure. An AD Volume Line that rises and records new highs along with the underlying index shows strong buying pressure. This is bullish. An AD Volume Line that fails to keep up with the underlying index and fails to confirm new highs reflects weakness in buying pressure. Market strength is undermined when buying pressure fails to confirm an advance.

The chart below includes two breadth indicators that work together.  The area plots the McClellan Summation Index.  That’s a long term measure of market breadth.  [See explanation of both indicators below]  The Summation Index is positive when it’s above the zero lines. Drops below the zero line are negative. The lines have been sloping up over the past month. The histogram is the McClellan Oscillator. That’s a short-term measure of market breadth. The two lines work together. Oscillator moves above zero cause the Summation Index to rise.  The Oscillator has spent most of October above zero which caused the Summation Index to strengthen. Crossings above the zero line is a positive signal.  That happened at the end of October, the Large caps markets started an uptrend.

FOOTNOTE… The McClellan Oscillator is based on net advances of daily stock gainers minus daily losers.  It’s derived by subtracting a 39-day EMA of net advances from its 19-day EMA.  It’s a short-term momentum indicator of market breadth.  The McClellan Summation Index is a running cumulative total of the Oscillator.  And is a longer-term measure of NWST1100 breadth.  Both indicators were developed by Sherman and Marian McClellan.

Charts below compare the most important representatives:

The most difficult time to make decisions in the markets is when the down market is changing because the change is fast and big, the change that happens in a day or two usually represents one-third of future growth. Since the end of October, crypto markets have experienced significant changes which is a positive sign that we could be nearing the start of a bullish trend. During an extreme bearish price spike on Oct-23, some people called a good opportunity to get prices on the cheap. In terms of inventory (position trades), the prices were WHOLESALE. This was where retail traders had been shaken out of their assets while institutions quietly absorbed the available supply and accumulated. After a fake breakdown, NWST1100 was undergoing some really massive bullish action, the index was making one of the largest price leaps in its lifespan indicating the early stages of a bullish reversal came to fruition. The rally was facing stiff resistance at the downtrend line. This showed that the bears had been still active at higher levels. After a few days of consolidation, the bulls assert their supremacy once again. A new uptrend was signaled on a break above the downtrend line. The 25-day EMA is sloping up and the RSI is in positive territory, which shows that advantage is with the bulls.

2100NEWS Digital Assets 100 Large Cap Index (NWSL100)

The indicators give us similar signals of stronger upside momentum as for NWST1100: we can see that RSI is bullish – over 60, the brown PPO lines are sloping up. Crypto market Breadth indicators are rising, NWSL100 is not strongly correlated with BTC as NWST1000 (bottom box). The difference, however, is that NWSL100 will exceed the previous peak if it grows by 90%, NWST1100 after 50% growth.

 


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