VIX trade ideas
VixSince January there hasn't been one reason for this thing to break out; NOT.ONE.
CPI coming in better than expected
PCE coming in as expected or better than
PPI Coming in as expected or better than
Powell talking a hawkish game but only raising 25bps
Even the ADP came in lower ...
With that being said for the sake of common sense now I'll get to the technicals.
Forming a bullish wedge here on the chart with bullish divergence on the RSI.
Hourly RSI over sold but that could just lead to a pop to the 20ma.
So that brings us back to this daily wedge pattern. sometimes patterns need Catalyst or "News" to breakout; I thought today's rate hike would be that Catalyst. Looking ahead , besides ECB rate decision tomorrow, and Fridays January unemployment I don't see a Catalyst coming in the next week to make this breakout.
Sometimes there is just a cycle correction like what happens after the summer months in early Sept and sometimes in mid to late Feb.
For now we wait an see , if vix loses support here, we head back. To 16.50 which is its yearly trendline support
Wow. If this plays out look out stock market.Giant double bottom with a bullish symmetrical continuation triangle forming at the end which can clearly be seen on the 4 hour chart. This is the daily chart. If the VIX makes its way up to form the neckline of this double bottom then we are no where remotely close to the end of this bear market : ( let's hope not.
Possible VIX OutcomeDrew a Bullish Symmetrical Continuation Triangle. You can see a Double Bottom being formed within the Triangle which is how they are made. The relative strength does match. A rising VIX means a lowering stock market. The DXY is rising as well which rises with the VIX as stocks lower.
VIX GAPS COULD NOT BE EASIER!Here we have another gap, and these really seem to play well on the VIX! Not guaranteed but something to watch. DXY is holding strong as well ;) Not financial advice, DYOR
www.investopedia.com
Gaps are spaces on a chart that emerge when the price of the financial instrument significantly changes with little or no trading in-between.
Gaps occur unexpectedly as the perceived value of the investment changes, due to underlying fundamental or technical factors.
Gaps are classified as breakaway, exhaustion, common, or continuation, based on when they occur in a price pattern and what they signal.
How to Play the Gaps
There are many ways to take advantage of these gaps, with a few strategies more popular than others. Some traders will buy when fundamental or technical factors favor a gap on the next trading day. For example, they'll buy a stock after hours when a positive earnings report is released, hoping for a gap up on the following trading day. Traders might also buy or sell into highly liquid or illiquid positions at the beginning of a price movement, hoping for a good fill and a continued trend. For example, they may buy a currency when it is gapping up very quickly on low liquidity and there is no significant resistance overhead.
Some traders will fade gaps in the opposite direction once a high or low point has been determined (often through other forms of technical analysis). For example, if a stock gaps up on some speculative report, experienced traders may fade the gap by shorting the stock. Lastly, traders might buy when the price level reaches the prior support after the gap has been filled. An example of this strategy is outlined below.
Here are the key things you will want to remember when trading gaps:
Once a stock has started to fill the gap, it will rarely stop, because there is often no immediate support or resistance.
Exhaustion gaps and continuation gaps predict the price moving in two different directions—be sure you correctly classify the gap you are going to play.
Retail investors are the ones who usually exhibit irrational exuberance; however, institutional investors may play along to help their portfolios, so be careful when using this indicator and wait for the price to start to break before taking a position.
Be sure to watch the volume. High volume should be present in breakaway gaps, while low volume should occur in exhaustion gaps.
VIX long, but how long?VIX price movement is clearly narrowing from a charting technical view, but within the economic fundamentals we have the FED raising rates at an extremely fast pace into a slowdown. Their publicly stated inflation projection was clearly wrong, I highly doubt they will squash inflation with much accuracy given these blunt force tools. For this reason the VIX could go well beyond the 35-40 range if the FED over raised rates. Since Powell was guessing on inflation after injecting more money into the system than ever before(no data to support obviously), it’s fair to assume there is no data to support the current pace and magnitude of raises in this slowing environment. If the current pace is perfect(again no data it would be almost lucky) then the VIX could fall from 35. My base case is the VIX goes over 40 and the FED cuts rates to fix their second mess later this year.
Volatility To Go Lower?We have a gap below that would provide a 3% scalp, most gaps do fill and we are pretty close at this point. IMO, there's a statistically good chance this could wick down or fill after hours but it's a good level to note. I'm thinking if we get there, it would be a good spot to reanalyze for a long position. Not financial advice, DYOR.