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Volatility – Weekly Analysis

Volatility Technical Analysis launches our Weekly Series. Using a disciplined blend of technical analytics, candlestick evaluation, Elliott Wave methodology, and classical chart patterns, this series is designed to isolate the signals that matter most and anticipate the shifts that shape market direction.

CANDLES

Weekly

Daily

After the bullish monthly close in volatility instruments, we experienced a rather wild week. However, Friday’s daily candles suggest there is a good chance the storm is behind us, at least in the short term. VIX and VX closed the daily with Bearish Engulfing patterns while breaking below the 8 EMA, which now acts as resistance. The US VIX and VIXY also printed bearish candles, though with less conviction.

On the weekly, formations closed neutral-to-bearish. That said, weekly trends remain bullish, and bears will need additional confirmation to establish bearish intent and flip the trend. This remains an open question heading into next week.

Overall, the start of the coming week has better odds for further volatility compression. However, the risk of renewed upside in volatility toward the latter part of the week remains. The 2D and 3D momentum readings, available in the first half of the week, will be pivotal for shaping next week’s weekly close.