VIX Volatility Daily Chart Falling Wedge Oversold Positive Divergence

We watched the blue falling wedge and positive divergence launch volatilty in early February but instead of a sustainable move up, volatility stumbled lower, with traders becoming even more complacent and fearless, now firmly convinced that equities markets cannot go down anymore, and trees do grow to the sky (said cynically). Even traders waxing worry over markets are not doing what they say since they are not making negative bets as they may proclaim. This sets up excellent potential for a significant market top now forming.

The green falling wedge is in play now. Note the green lines showing the positive divergence in place that will want to launch price in the days ahead. The volatility bears (market bulls), however, continue to enjoy the VIX moving lower and markets moving higher. The 20 MA is under the 50 MA which is bearish for VIX, bullish for markets. Note the small red lines for RSI and stochastics showing that in the short time frame, after a bounce, price will likely want to come back down again for another look at these levels before a sustainable sideways to sideways up bias develops.

Projection is a bounce here, the 14.8-15.6 area remains open to bottoming behavior in the days ahead but the bottom rail of the pink channel should hold and VIX will begin an upward trek for the weeks ahead from these levels. Price moving above the 20-day MA will signal that the sustainable upside move has begun (up VIX = down markets). 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.