deen

30 Januar 2020

Crypto Broker Weekly Rotation Report Week 5

Patrick Heusser

Patrick Heusser

Senior Trader bei Crypto Broker AG

Über den Autor

This is our Crypto Broker Weekly Rotation Report, directly from the Crypto Broker trading floor, with extensive insights into the crypto asset market, including quantitative data analysis, macro market comments, technical chart analysis, and rotation (sector) analysis. A PDF version of the report can be found at the bottom of this page.

Should you wish to receive this weekly report by email, you may subscribe below.

Contents

1 Rotation Analysis

2 Altcoin Futures Basis Analysis

3 Top Ten Comparison

4 Volatility and Correlation Comparison

5 ETHBTC 4h Technical Chart Analysis

6 Market Capitalisation Overview

Glossary


1 Rotation Analysis

A Bullish Trend

The market has consolidated in the range of 8,200 to 8,500, and the short-term support is holding impressively. The upmove towards the resistance level between 9,000 and 9,250 was driven by several factors. There are still fears surrounding the geopolitical events in the Middle East, and the new cycles are focused solely on the Coronavirus in China. The next bullish level to watch is the 10,200 mark.

The overall situation seems to be a bit overbought and further consolidation is to be expected. Despite the immediate cancelling of flights to and from China by several airlines there is also the BTC halving coming up in 102 days. All of these factors are reinforcing the fact of BTC being a Store of Value. Implied volatility levels are remaining stable at high levels with a three-month volatility at 66%, whereas realised volatility has decreased. The volume in derivatives has also increased, but mainly in terms of the Futures contracts. MACDs for BTC indicate a bullish scenario, and coins ranked within the Top 10 are overbought, similar to the coins ranked between 10 and 50.

In the charts below, you can see the technical analysis for the Alt/Mid/Shit Indices. Attached you will also find our short-term view on support and resistance levels for all three indices:

Alt:    Support 69 / Resistance 75     /    Alt 4h Chart
Mid:  Support 63 / Resistance 73    /    Mid 4h Chart
Shit:  Support 61 / Resistance 76   /     Shit 4h Chart

Privacy coins are in favour of the investors. XZC and ZEC performed better than ZEN, XVG, PIVX, GRS, and XMR in this sector. The Payment, IoT, File Storage, and Entertainment sector has weakened over the past few days.

The outperforming coin is still Ethereum Classic, ETC. Other coins within the Mid Index, e.g. ADA, performed over 20%. The constituent coins, ICX and LSK, on the Shit Index even performed over 30%.

Figure 1: Sector rotation

2 Altcoin Futures Basis Analysis

The derivatives volume has increased in the Futures contracts. The Futures basis tended to normalise in the beginning of the week, but the uptrend towards 9,000 widened again to a premium of approx. 2.5%. Open interest is staying stable at high levels on all exchanges.

The perpetual funding rate has risen over the past few days to an overnight rate of over 20bps.

As the current holding of derivatives positions is rather expensive, we expect a short-term correction of the market.

Figure 2: Altcoin futures basis overview

3 Top Ten Comparison

Table 1: Data source: Coinmarketcap; change to last week in parentheses

 

Table 2: Datasource: Coinmarketcap; change to last week in parentheses

 

4 Volatility and Correlation Comparison

 

Table 2: Datasource: Coinmarketcap; change to last week in parentheses

 

Figure 4: Correlation comparison; Data source: Coinmarketcap

 

5 ETHBTC 4h Technical Chart Analysis

 

Figure 5: Data source: Bitfinex; Chartsystem: Tradingview

I need to revise my call

The levels I mentioned in last week’s report are still valid. However, the bigger picture has changed towards a bearish stance. Let me start with a zoomed out analysis of the daily chart.

Currently, we are in a potential symmetrical triangle, which has developed over the last five months. We have three or more touchpoints on both legs. The apex is still a ways away, and we just managed to turn halfway back down towards the lower leg. Everything is set up for a potential breakout to the downside, which would be textbook for a symmetrical triangle (usually a continuation pattern).

Additionally, the daily Ichimoku cloud is bearish, plus the upper leg was well respected as resistance. Now, the lower leg is nicely converging with the 0.0190 level that we mentioned last week. Currently, we are trading below it. Also, 0.0170 is very close to the possible breakout point of the lower leg of the triangle.

Zooming into the 4h chart we can see that the bulls and bears are fighting inside that potential symmetrical triangle. At present, the bulls are still in control, but the price took a dive deep into the Ichimoku cloud to just stop above the lower band. 0.0190 has already given way, and 0.0185 is the next minor support.

If we break through the cloud below 0.0185, I will close all longs and get ready for a breakout to the downside. The first leg to enter: when we see a daily closing below 0.0175; the second leg: when we break 0.0170; and the third leg we will keep open for a retest of the lower leg of the triangle at around 0.0175.

View the charts: ETHBTC daily chart   |   ETHBTC 4h chart

6 Market Capitalisation Overview

 

Figure 6: Market capitalisation overview; Data source: Coinmarketcap

Glossary

Advance Decline Line – the Advance Decline Line shows the ratio of coins for which the market cap increased relative to the market cap of BTC for each day.
ATH – all time high (maximum lookback period of 730 days).
Data source – tables and charts are based on daily close prices provided by Coinmarketcap.
EWMA – exponentially weighted moving average.
MACD – moving average convergence/divergence is a popular technical indicator to identify trends in the underlying instrument. It consists of the MACD and signal line, and the area shown in the background. The MACD line (strong) is the difference of two exponential moving averages, which are defined by the first and second parameter of the indicator. The signal line (weak) is the exponential moving average of the MACD line defined by the third parameter. The area in the background illustrates the difference between the MACD line and the signal line.
Pearson Correlation – quantifies the linear relationship between two variables.
Spearman Correlation – quantifies the monotonic relationship between two variables. As such, the Spearman Correlation is based on the ranked values of each variable and is used to detect non-linear relationships between the two.

More information about and contact details for Crypto Broker AG are here.

Download the Rotation Report as a PDF here.

Weiterlesen