Volatility – Monthly Analysis
Traditionally, we open our monthly 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
Monthly
The most interesting closures today were, unsurprisingly, the monthly and the weekly. The VIX-tracking instruments formed a set of Gravestone Dojis which, if followed by the typical reaction, should push the index toward the single-digit area. The weekly closures were also bearish, printing strong Inside Down candles. If the index continues lower in the coming weeks, it will have a solid chance to form a Double Top — again pointing to a target in the single-digit zone.
For reference, VIX last traded in single digits in 2017.
Ending Diagonal
Just two days ago I mentioned a possible Ending Diagonal in the rear mirror. So far, the wave down looks clearly impulsive. If this impulse does indeed complete in December, we could see a bounce in January followed by another impulsive leg downward. That sequence would almost certainly push volatility into the single digits. The real question is what such a structure would mean for the broader stock market.
For now, the index remains bearish until reversed on at least the weekly frame.
Happy Trading!
