VIX Volatility Daily Chart Falling Wedge Oversold Positive Divergence

Volatility continues to receive a slapdown, falling from 48 to 20 in twelve weeks, down -58%. The purple lines show the falling wedge in December which bounced price but note that the only indicator positively diverged was the MACD histogram and stochastics since they were buried at the bottom. Therefore, another lower low in price should be expected after the pop, and that low is occurring now.

The blue circle sets up a launch pad area which will send the VIX back upwards like a rocket (up Vix=down markets). The blue lines show postive divergence across the board which creates the launch pad for price. Sometimes divergences will fail if price continues to stumble lower but even so, price needs to perform a recovery bounce here, and, depending on how the blue line negative divergences appear afterwards will signal if this is a more durable bottom area.

The low ADX shows that the twelve week downtrend is NOT a strong trend. Look at the pink box that shows the upside move in VIX was a strong trend, thus, some of that strength should come back into play moving forward. Projection is for the VIX to launch skyward from the blue circle (now) and move sideways to sideways up going forward which corresponds to equities markets moving sideways to sideways lower. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your financial advisor before making any investment decision.