Volatility – Weekly Analysis
VIX—one of the most important tools in our strategy arsenal. Let’s hear what its candles and indicators are telling us and what they suggest about the future.
CANDLES
Daily
Weekly
Today’s market drop printed strong daily bullish candles for the volatility instruments. The prices, however, went too far too fast and overstretched technicals on multiple hourly frames, including some daily. The daily closed above 3 standard deviations, and we know what it means. I think we’ll see a cool-off for a day or two (almost guaranteed), and the most important message from these days will be the candle combos—either reversal or consolidative types.
Speaking about the weekly, the messages are quite concerning. VX indeed formed a Rising Three Methods pattern—the most dangerous among the four I track. VX and VIXY formed respective bottoms, which is also not encouraging. Judging from the weekly signals, the odds for higher highs are quite significant, and we will be tracking these together with the other frames.
A very concerning signal also came from Volatility Futures (VX). It was the only one to close the 15D frame. The frame recorded an 8/20 EMA bullish cross, confirmed a bullish reversal on candles, and was supported by at least two technical indicators. This is indeed a concern—the next three weeks are likely to be very volatile.
Happy Trading!
