VIX closed November with a complete bullish Engulfing and this is very concerning as it might trigger a multi-month bull market for the volatility index. However, there are some bearish signals on the smaller time frames. Let’s try to decipher the candlespeak there.
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Bullish Engulfing. Based on the Candlesticks theory, we should expect at least one month of higher prices after the formation.
The current weekly candle formation shows some hope. If it stays on approximately the same level for the next 3 days and does not close the week above the previous week high, it could make a bearish combo.
Let’s see how the week closes.
The daily candle is more bearish than bullish. It could be treated as a Hanging Man that closed above BB. There is a very good chance of a decline in the next few days. This would be supported by some indicators.
While the monthly candle is clear about the path, there is a chance that the rally could be short-lived – a week or two. The weekly and the daily candle structures point towards that option.
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