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Correlation

Bitcoin and S&P500 correlated more than people think! For the longest time, most people always correlated Bitcoin price to Gold price but there was a small subset of people that argued the equity market was the true correlation. As shown in the comparison chart above, we saw that the equities market began selling a few days before the cryptocurrency market given that cryptos are already down over 80-90% but this is more an analysis over global selling. We can see that October 9th was the day stock broke the triangle and began selling heavily while Bitcoin continued to range for a few days before taking the plunge. After the DOW fell over 800 points yesterday, the crypto market was hesitant to follow suit and waited until the end of the day and into the night before selling off heavily. Some exchanges even saw price break below $6000 as volume picked up massively and volatility re-entered the market. We also got news last night that the Shanghai Composite hit new lows not seen in 4-years last night when that part of the world woke up and saw the carnage of the New York session. Some rumors were swirling around that the Japanese were selling their crypto to cover the massive losses they were incurring on their equity portfolios, which caused the huge cascading sells in Bitcoin and rippled across the market. Some might say that a bounce in stocks might cause a bounce back in Bitcoin so keeping an eye on this correlation could be profitable if we are in fact correlated. Thanks guys
COINBASE:BTCUSDEducation
by CM_Trades
15
USDJPY and GoldWhy is gold correlated to yen? In reality, there is no proper explanation to this. Although the fact that gold and yen both share the status as a safe haven does in a way validates this correlation. But it is merely scratching the surface. Correlations in the markets come and go. A more recent example that traders can recollect was the short term correlation between oil prices and stocks in the first half of the year, which soon faded. This brings an important point to mention, which is that with any correlation you cannot take it for granted. Therefore traders need to constantly, and at regular intervals check on the correlation between gold and yen. For example, Gold and USDJPY have a -94% correlation on a weekly basis. However, this fluctuates and therefore traders should always keep an eye out on any significant changes.
by jarttu
4
CADJPY - Long for a Sustainable Bull RunThe yen has been performing very weak and it is just sensible to long against any yen pairs at the moment. Choosing the Canadian dollar is because CAD is not too strong such as Euro and Pound where chart patterns are hard to identify and entry level is not easy to capture. The Dollar is not chosen due to the obvious that Dollar has been performing very weak and the major trend has already become very shaky. The Canadian dollar has turned out to be the best option as it is still slightly stronger than the dollar and is not way too bullish to identify good entry levels that give good reward risk ratio as well.
Long
by AlgoVenture
Potential BTCUSD Targets - Uptrend Funded by AltsHello and welcome to my idea of potential BTCUSD targets over the short-mid term trend. My targets are derived by Fibonacci levels, primarily those established by the most recent trading range, established by the highs on June 18th and lows on June 24th, as well as the larger set of Fibonacci levels, established from the $10,000 touch on May 5th, down to the lows of June 24th. After a breakout of the .236 level on the larger fib at 6,750, BTCUSD pushed to a rejection of the 1.618 fib of the previous trading range. I believe that this level should continue to consolidate, as it has re-entered the pennant on the daily timeframe, from which we fell upon breaking down 7,000. I believe the previous range's 1.272 fib level at 7,155 should hold as the last support. If this level breaks, I believe any expectation of uptrend continuation should be diminished, with exception of a deadcat bounce on a 7,000 retest. However, if we are able to hold above this level, I believe we are on route to testing the 0.5 fib level of the larger range, at 7,866, with potential of testing the resistance line of the pennant in the 8,200 range. I am rather optimistic on a visit to 7,800 levels and would recommend building out a large portion of running positions at this level. Granted a possibility for continuation, I would personally only risk the remaining 25% of running positions. Contrary to popular thought, I believe this move will come at the expense of alt-usd pairs, which will fail to surpass their local highs and continue their retrace, due to newly developing negative correlation patterns. For further understanding of this idea, refer to my post: tl;dr: I remain bullish on BTCUSD and believe it will vastly outperform alt-usd pairs. Happy trading!
BITFINEX:BTCUSDLong
by checkm8
2
Study: Crypto Mentality Shift - Potential Bull Market Trigger?Hello and welcome to the revision of my working theory regarding market patterns in cryptocurrencies. This analysis follows my previous write-up regarding why intra-day traders in cryptomarkets should focus on alt-usd pairs as opposed to BTCUSD, found below: In this analysis, I focus on the 4-hour timeframe as opposed to the daily timeframe found in the original. This is due to my impression of a change in market mentality, rendered by BTCUSD's most recent upward thrust from 6,750 to 7,350. During this movement, many alt-usd pairs followed BTCUSD, although some lagged in performance. However, in the following days - as BTCUSD consolidated at the 7,300 level following a rejection of the 1.618 Fibonacci level from the previous week's range, many alt-usd pairs retraced the majority of their upward movements that mimicked BTCUSD. I have been closely watching beta and correlation levels in this scenario, as I believe this is an important signal and should not be discounted by traders in the space. What we are seeing is a weakening of a long correlation pattern between BTCUSD and alt-usd pairs, with a weakening beta on alts. It was always my belief that this correlation would break, as per the previous study. However, in the current state of the market, we see the correlation break favoring BTCUSD, meaning that BTCUSD is maintaining its new-found value at the expense of alts. Given this developing relationship, a strengthening BTCUSD will attract more alt-traders, while alts will continue to lose strength and therefore value. In addition to this, as the trading volume in BTCUSD has been declining over the majority of the YTD, it is very possible that we will see a large volume breakout on a daily level, which again - will be funded by declining alt coins. Overall, this would give BTCUSD a good push for further uptrend progression. I believe that BTCUSD has a high possibility of reaching levels between 7,700-7,850 in the near term, but this will be a painful journey for alts, as traders of the previous mindset (high correlations, high betas) will attempt to push alts. I strongly doubt most alts will exceed their local highs, which were developed on BTCUSD's push to 7,350. This is simply because the alt-usd retraces seen during BTCUSD's consolidation are simply too large, which deter the confidence in the alt market. Those who did not take profit on the initial rise will be anxious to get out, keeping the selling pressure on alts strong. See chart below for my BTCUSD targets: My theory is further reinforced through an analysis of 4-hour betas and correlations on an individual basis between large cap alt-usd pairs on Bitfinex. This collection of low 4-hour betas (SMA-smoothed on a 3-period basis) amongst the entire grouping has not been seen since February/March. If this trend continues, we will begin to see negative betas (negative correlations). In conclusion, my theory is that a market mentality shift is taking place . Traders are willing to remain bullish in one asset class (BTCUSD or alts-usd) while the other asset class is declining. In our case, this currently favors BTCUSD. While this shift may be painful in the short term for alt-usd pairs, this is a very bullish sign for the market. This means that people are able to maintain their confidence in cryptocurrency as a whole. Previously I noted high correlation and high beta patterns, that implied that sideline money was coming into alts-usd and BTCUSD simultaneously, as well as exiting both markets simultaneously. This change implies that the money will begin to flow in a cycle, from one asset class to another, allowing the market strength to develop and gradually begin a bullish cycle. tl;dr: Times are changing - we are potentially entering Timespan D. Thank you :)
BITFINEX:BTCUSDEducation
by checkm8
6
USDCAD Buy stopBuy stop placed at 1.31550. Stop loss placed below previous low of the double bottom. Take profit placed before the top of the double top and under a possible minor resistance level. Price looks to be in a healthy uptrend on the daily timeframe. There is divergence pointed out on the hourly timeframe. Price has formed a double bottom at the B point of a XABCD double top which i often see. Again hoping trade doesn't get triggered early or Stopped out accidentally. This pair isnt exactly correlating with other USD pairs since many of them are moving up and actually looking to reverse and see the dollar weaken this pair is opposing them heading down and looking to reverse seeing the dollar strengthen. The power of Cad may be stronger in this pair and I shall check other Cad pairs and update this post as to what they look like. Either way the opposing correlation is concerning.
Long
by nicktarver144
Study: Why you should stop trading BTCUSDHello all and welcome to my analysis of trading patterns in crypto markets! Before we begin, there are several key assumptions we must establish: The reference data is based on trading prices and volumes on Bitfinex. This is because I believe that Bitfinex is the leading exchange in the cryptocurrency market due to its popularity, despite higher recent BTCUSD volumes on Binance. Only USD-based pairs are examined The index is a dollar-volume weighted aggregate of margin-tradeable alt coins on Bitfinex, excluding BTCUSD The correlation and beta calculations are on a 14-period basis, which are benchmarked against BTCUSD Given limitations with the data, the index is examined only on a range from October. An second index, consisting of only ETHUSD and LTCUSD will be provided to show the longer timespan In this snapshot, I have split the frame into three timeframes (A, B, C), which highlight a changing market dynamic over time. Timespan A captures the peak of bitcoin's 2017 hype. The lowest correlation point is -0.65 which was accompanied by a beta of -1.65, while the highest correlation was 0.80 with an index beta of 3.44. During this span, a relatively volatile correlation (refer to the standard deviation of correlation oscillator) between the altcoin index and BTCUSD can be examined, with similar volatility patterns in the beta. The interesting component here is that, during the price rise, alts would follow BTCUSD when BTCUSD was rising, but experience inflows of money from BTCUSD when the latter was falling. As such, the market mentality was bullish - the money would flow from BTCUSD to alts and then back around. By examining the index beta over this period, you can see how alts outperformed BTCUSD when times were good and when times were bad. Timespan B begins to paint a different picture, where the volatility in correlation and beta measurements is far less drastic. Over this span, the lowest correlation was 0.28, showing that directional movement between the index of altcoins and BTCUSD remained positive, even when weak. It is important to note the longer duration of high correlations during this period, which were accompanied by similar movements in beta. Timespan C is where we currently are and, in my opinion, this is a very interesting setting in the market. As the chart shows, the lowest correlation was 0.50, while beta almost consistently remained above 1. The standard deviation of correlation had been only trending downwards from Timespan A , which is reflected in the relatively consistent correlation measurements over the period. The conclusion to be made is that altcoins, in aggregate, have become strongly correlated to BTCUSD, while a beta above 1 indicates higher performance in alts than BTCUSD. TL;DR: chart BTCUSD and trade altcoins based on BTCUSD momentum. As the statistics show, the market mentality has shifted away from moving money from one crypto to another, but rather buying/selling alts and BTCUSD simultaneously. Furthermore, we can examine a longer timeframe in the chart below: In this chart, the correlation and beta, as well as the standard deviation of correlation, are based on a dollar weighted aggregate of ETHUSD and LTCUSD, which were the longest standing altcoins on Bitfinex. The narrative described above remains the same, where the correlations have become far stronger in recent times compared to their historical trends, while the beta has become stronger over time, gaining more ground above a measure of 1 during the high correlation periods. The final point is an examination of dollar volume in BTCUSD compared against altcoin dollar volume: As can be seen from the chart, the dollar volume in BTCUSD has been losing ground to the dollar volume in USD-based alt pairs (on Bitfinex)
BITFINEX:BTCUSDEducation
by checkm8
13
$BBBY: #Bullish #Long while market still shaky. Best Candidate?!I am interested in BBBY I've used 3 timeframes for overall analysis. Current Price: $20.05 Current Support: $18.70, $16.40 Current Resistance: $20.80, 23.80, 26.25, 30.60 Observation of each #frame: 1. Monthly frame: - Respected the support at $16.40 - Out of Curved channel resistance to sideway. - Volume shows increasing quantity for the last 12 months. likely Collection of big institutions/funds. - RSI just crossed above 30. A RSI Support from Oct 2008 till June 2017 (10Yr), then become resistance (June17-June18). Despite the crossing above 30, the Reading still Down trending. - RSI is almost crossing above RSIwma45 during current month of June 18. - Cardwell's (cfg) shows an increasing tip toward 50Level (an Uptrend signal for CFG>50) 2. Daily frame - Resistance at $20.80, $23.80, $26.25. - Support line at 19.10, 18.80 - WMA45 support at $18.87 - gap up closed, and still prices are retraced 5.31% from the 20.80 high. too early to be sure, but for now, it looks holding above the end of gap. - Support/Resistance proven trend-line (white-color) adding current down pressure. - RSI crossed above 60 at breakout of 18.20 reaching 76, retracing to 55-65 while price hold above WMA support. - Daily RSI retracing is a signal for weekly being at resistance. Weekly RSI resistance is 50, a critical resistance if Price would start up trending. 3. 4H frame - I use 4H frame for stocks to spot early strong RSI Reversals. Check the strong PR happened between 40-60 zone last two weeks of May. - currently, RSI under pressure by RSIwma45 in teh 4H frame as Daily RSI is retracing (breathing). First Entry should been made at breakout out of ~18.5 June 5th. Second Entry would likely be: - at breakout of inclined resistance (daily frame) - and horizontal resistance at 20.50 - 21.00 - keep observing for strong PR signal in 4H frame - This should also be coincide with RSI/Price being positive on Daily frame. - Volume above average, as confirmation. Final Note: $SPX, $COMP, and $DJI are a bit shaky. $BBBY will be entered only in stages, and with market overall indices being mostly positive (No NR nor Support breakouts). Best time to by the stock is at Index starting new uptrend. Keep your eye wide open on market index. Makr sure stock remain positive at timeframe correlation perspective. because it'd quickly turned risky if break ones of current major supports and would likely turned into something totally different that what we are looking for now. **The best candidate is ones with positive technical symptoms while market at end of sideway/downtrend shaken period**. Will be updated ...
NASDAQ:BBBYLong
by tatrader77
XLE-WTI correlation; cue to XLE Cup and Handle 2-year breakoutXLE and WTI demonstrate high level of correlation i.e. move in same direction. XLE provides stock-ETF alternative for traders who do not trade WTI. Interesting to note that WTI has outperformed XLE since Q4 2017 while the latter was capped at a 2-year high printed in December 2016. Bullish view of WTI and XLE in previous piece I was looking for swing long WTI as a continuation trade. I see it sitting at potential support. At same time XLE is capped at 2-year high resembling a cup and handle pattern. If WTI long continuation is correct, XLE may do a breakout above this resistance. In fact there is room for XLE to catch up since it is underperforming WTI in the near term. Bearish alternative There is a bearish view. When correlation is found question is always which is correct A or B? What if WTI is bearish? Then XLE resistance is justified and the current underperformance would be easily justified as a divergence. I stick to the bullish view.
AMEX:XLELong
by colonelkink
Follow the Market and be patient!Price may go both ways. Weekly chart shows a nice bullish bounce off a supporting range zone from about 2 years now. Now price is mainly being rejected off the 38.2 Fib from the long downtrend on the daily chart, which a rejection off 38.2 FIB tends to be the strongest in continuation of a trend so I may be entertaining going short instead of long. Whichever way the market goes we will follow. Major pips coming soon! Follow us on Instagram #FXL_Style Join our new Telegram group to learn more about how I look at the market, catch pips or just share ideas to grow together. t.me FXLifestyle - Trade Your Future
by FXLifestyle
Mispricing in correlated coins? Ripple and StellarRipple and Stellar Price Correlation is 88.8%. (+) Ripple and Stellar Returns Correlation is 49.86%. (+) Wanted to check out if there is any mispricing to profit from by simply betting on the one that diverges. However as we can see from the chart, there is no clear indication on who is the market leader (the one that determines the overall trend) and both Stellar and Ripple take turns to lead the movements. The extent of the movements is also unclear. Maybe we can see it on a lower timeframe? (But it shouldn't matter actually) Conclusion: Cannot really profit from mispricing since there is no clear indication of who is the leading the trend and converges back to the norm by either coin. Furthermore, correlations are not causations. Sometimes it may that A and B are correlated but actually its C that is causing A and B to be highly correlated. Therefore there is a need to check on a whole range of other correlations between as many assets (other coins, especially the largest ones like bitcoin and ethereum, and prob USD) Lastly, a correlation study is historical and as we all know in this industry that past returns are no guarantee of future success as factors causing correlations can change over time.
KRAKEN:XRPUSD
by BlackPapaya
Dread Pirate Roberts And His Correlation With Bitcoin Dread Pirate Roberts aka Ross Ulbricht And His Legal Proceedings October 1, 2013 - Ulbricht arrested. Bitcoin crashed immediately but only to instantly enter it's 2013/2014 bubble November 18 - Ulbrichts Silk Road account, Dread Pirate Roberts, logs in despite Ulbricht being in prison. Major correction occurs in the bubble. November 22, 2013 - Silk Road goes offline. Last pause/consolidation before a new ATH/bubble top. Fast Forward through clear, extreme and categorical corruption, as well as multiple violations of the constitution by the US government in many facets. (Where’s Samuel L. Jackson when I need him?) February 4, 2014 Ulbricht indicted. Beginning of a major crash and the subsequent brutal bear market. January 14, 2015 - Trial begins. First bottom of the double bottom is made. February 4, 2015 - Ulbricht found guilty. Beginning of the consolidation for a trend reversal. May 29, 2015 - Ulbricht sentenced to double life + 40 years (ow, right in the feels). Short term bottom within the consolidation band between the double bottom. The bottom of the bear market occurred a handful of months later. August 18, 2015 - No correlation with Ulbricht. Second and final bottom of the bear market is made. January 2016 - Appeal filed; smack dab in the middle of an important consolidation period after the bear market downtrend was broken. May 31, 2017 - Appeal denied. First big and continuous leg of the next bubble cycle occurred over the previous 2 months. December 22, 2017 - Petition for Ulbricht's Writ of Certiorari(his last hail mary) to have the US supreme court review the case. they eventually picked it up shortly after. The first bottom after the bubble’s peak and the beginning of a bear market. February 5, 2018 - 21 organizations hop on board Ulbricht's petition. This is the EXACT SAME DAY that market made its first significant bottom with high volume. March 7, 2018 - 7th) US government responds. One of the responses was the dismissal of the sixth amendment claim because "No precedent has been made." Double top pattern completing and signaling the next downside leg in the movement. March 20, 2018 - Ulbricht responds. Short term top. June ??, 2018 - Supreme court makes decision. early/mid 13/14 bubble - shady business(average folk like us ain't allowed to know what happened) end 13/14 bubble - finalizing Ulbrichts indictment and the categorical evisceration of the Silk Road. Bubble Top occurs a few days later FF through court business January 2015 - Trial begins. Trend goes from bearish to neutral. FF standard legal stuff December 22, 2017 - Ulbricht goes all in on the supreme court Bubble top occurring February 4, 2018 - Legit organizations step in to help Ulbricht. Major bottom occurring. March 7, 2018 - US government says “Not so fast there Bucko” top occurring The anticipation/uncertainty leading up to the major legal proceedings, ie. court/supreme court, occurs in a downtrend while the major legal proceedings occur in an uptrend. I don’t know what the supreme court decides but there is anticipation/uncertainty now and the downtrend is occurring. Therefore an uptrend should have begun by the the same time the supreme court makes its decision, "by june". I’ll say the average all of the possible days that could be; June 15(probably closer to 30th). It's the same time area that consistently pops up in my analysis and agrees with McAfee Ulbricht shot down - US given go ahead for being police state(take it with a grain of salt here). Not good for bitcoin. Ulbricht given glimmer of hope - More clear and outright evidence that compounds the fact that the US government is corrupt; to a higher degree than we have already established. This should, but I highly doubt it will, spark a stronger cultural movement(or revolution) against "the establishment" due to how invasive and corrupt the masses now perceive it to be. Good for bitcoin freeross.org
BITFINEX:BTCUSDLong
by Lando_CalJizzian