Volatility – Weekly Analysis
Traditionally, we open our weekly series with the Volatility Index. We’ll review the candles, momentum, key levels, near-term risk, and timing—short, sharp, and essential for anyone trading, entering, or hedging.
CANDLES
Daily
Weekly
Volatility instruments produced an interesting split today. The weekly close for the S&P 500 VIX and VIXY was bullish (charts 1 and 4). However, the weekly closes for VX futures and the US VIX (charts 2 and 3) were bullish failures. Assuming that 2 and 3 “possess better knowledge,” as they close the latest, I would be very cautious about expecting a bullish continuation. For reference, there were a few historical cases when only VX closed differently from the other three, and the following week ultimately followed VX’s roadmap.
All daily closures were Bearish Harami patterns, with the first one being the cleanest — entirely within the range of the previous candle. We know that confirmation of a Harami often comes after a spike to a new high before the reversal is finally confirmed. If this is the case, we could see higher intraday volatility on Monday/Tuesday before the market eventually moves down. This scenario would also reconcile the uncertainty in the weekly signals — the index could move higher during the week without necessarily closing the week with a green candle.
Given the importance of the next few daily moves, I plan to cover volatility in the daily reports early next week.
Happy Trading!
