As long period of time readers understand I’m a big fan of $VIX technical structures and compression patterns. Typically dismissed as non-chartable I believe we have actually effectively to put that argument to bed a long time ago
Just Recently in ” Secret Charts” I once again laid out the $VIX as one of the essential charts to enjoy and it’s been interesting to say the least here during this OPEX week and for this reason I wanted to describe an upgrade as a pattern is forming that recommends a significant $VIX uprising might remain in the cards this fall.
Yes, $VIX again came under pressure into month-to-month $VIX futures month-to-month agreement roll-over, but remarkably it didn’t manage to fill the August gap which would have been basic fare if you will:
The great news for bulls may be as now 3 open spaces have actually formed on the futures contract.
In a method I relate to the $VIX an expression of main bank control and their self stated mission to “soothe” markets.
And so we can observe that following the most recent breakout of the $VIX ( and leading up to the compression phase of this OPEX week) $ VIX once again broke out of a smaller compression pattern:
In current months $VIX has gotten crushed during every Friday like clockwork and possibly it will once again this Friday.
That’s not the concern.
The concern is that all of these repeated structures are forming what might be a much more ominous pattern that might even surpass my previous 46 target.
The structure? A potential bigger inverted pattern:
Very first point to make: This pattern at this phase is unofficial and it’s most likely going to spend some time to construct totally. But this week’s low in the $VIX matches up well with the July left shoulder and this summertime’s low volume rally and summertime lows in the $VIX have formed a very clean head structure and the recent rise to 38 and subsequent drop today have started the procedure of forming an ideal shoulder.
How can this play out? Because we’re just at the beginning of the best shoulder formation we may, for example, have a fast spike towards the neckline, and then another rally in markets from there compressing the $VIX again.
The potential fire power of the pattern will have to be kept an eye on as the pattern develops, but currently it suggests a $VIX spike into the 55-70 range if the pattern verifies which would include a break above the neck line.
This is journey and patterns require time to develop and patterns can naturally get invalidated. I recommend everyone keep an eye on a prospective $VIX uprising of size. We definitely are keeping close expect sure.
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