Volatility – Mid-Day Alert

Volatility charts may be flashing one of the more important warnings of the week. Multiple instruments are now sending signals across several timeframes, and the convergence is difficult to ignore. What matters here is not one isolated candle or one short-term move, but multiple signals are beginning to line up at the same time.

In this quick update, we break down the latest technical evidence across the key volatility instruments to determine whether volatility is truly rolling over, or quietly setting the stage for another surge. If the bearish signals confirm, markets may get relief. If they fail, the next volatility spike could arrive fast — and that would likely add renewed pressure to equities just as traders start getting comfortable again.

CANDLES + TA

As you know, I normally track multiple volatility instruments for higher precision in forecasting. At this point, all of them are aligned, but I would like to bring the U.S. Market VIX into focus, as its signals are the most outstanding.

If no post or other official message from You Know Who spooks the market by the end of the day, the U.S. VIX has a very good chance to close the daily frame with several outstanding signals that are rarely seen together. To name just a few:

A spectacularly classical Three Black Crows pattern, with one small overlap and one small gap, supported by several additional technicals. Note that the index is not even close to being oversold, which suggests this could be the beginning of a trend rather than the end of one.

Price is also on track to break below the 8 and 20 EMA supports, which are likely to form a bearish cross tomorrow. The 50 and 200 MA could also flip into a bearish cross later this week or early next week.

If these signals, along with a few others, materialize, the chances of a new lower low for VIX would increase drastically. Let’s hope the market maintains the momentum throughout the day.