Flag Patterns and Volatility
I am noticing a sequence of repeating patterns in the Vast Volatility Treasure trove indicator, which is by far my favorite volatility indicator i have ever seen, shows various calculations of historical and implied volatility, all sorts of models are represented here and I do not know much about many of them, I have simply been an observer of HV10-90d vs IV 30-90d and I have found this VVTT study to replicate that well.
Moving on, I also trade mainly off of flag patterns and wedge patterns. Here I notice how HV and IV were both elevated in the last drop, but Friday's 1h chart seems to show the beginning of a bullish flag consolidation pattern.
The Volatility supports this because the dark blue and light green lines represent HV and the more deep colors represent IV.
The HV has risen as it did when we sold off, but only halfway as much, and the IV has also expanded and risen a bit in the sell off at the end of Friday session, but not as much as it had before in the last selloff and there isn't room or time for it to do so as it had before, so what is more likely is that volatility will fall and as the bullish flag becomes more and more clear on others charts across the markets, I believe there is a chance of ES hitting 7k before the market tops out for the year.
Moving on, I also trade mainly off of flag patterns and wedge patterns. Here I notice how HV and IV were both elevated in the last drop, but Friday's 1h chart seems to show the beginning of a bullish flag consolidation pattern.
The Volatility supports this because the dark blue and light green lines represent HV and the more deep colors represent IV.
The HV has risen as it did when we sold off, but only halfway as much, and the IV has also expanded and risen a bit in the sell off at the end of Friday session, but not as much as it had before in the last selloff and there isn't room or time for it to do so as it had before, so what is more likely is that volatility will fall and as the bullish flag becomes more and more clear on others charts across the markets, I believe there is a chance of ES hitting 7k before the market tops out for the year.
Note
The Alternate Bear thesis I offer here is that we are still within a larger bear flag pattern, but we have no doubt created a bullish trend inside of a bearish trend.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.