VIX Channel 7/15/2020
I modified my VIX channels after experimenting with today's trading session. The angles seems to work. VIX is not as clean as other indices, but the volatility runs seem a bit too orderly.
The channel is where we are now. There is a second channel above. However, anything above the red dashed line will sky rocket. The blue line is the current wedge we are in.
The lines can be stemmed from either February 2020 or from late 2019.
Why would this be useful? The next resistance at the ES may not hold if VIX doesn't agree. VIX can be used when a pullback is soon. Finding the supports at VIX is easier to find than finding a solid resistance on the ES.
Remember, VIX is NOT purely an inverse index. VIX also rises when retail traders are buying calls/longs at a lightning fast rate. So fast that the VIX recognizes it as a potential blowoff top. That happened in early June.
You can use the VIX to warn you when to exit longs. If you're a volatility trader, you can use the VIX to trade VIX ETFs like UVXY/SVXY. The former is easier. The latter requires you to seriously study the VIX for a while.
The channel is where we are now. There is a second channel above. However, anything above the red dashed line will sky rocket. The blue line is the current wedge we are in.
The lines can be stemmed from either February 2020 or from late 2019.
Why would this be useful? The next resistance at the ES may not hold if VIX doesn't agree. VIX can be used when a pullback is soon. Finding the supports at VIX is easier to find than finding a solid resistance on the ES.
Remember, VIX is NOT purely an inverse index. VIX also rises when retail traders are buying calls/longs at a lightning fast rate. So fast that the VIX recognizes it as a potential blowoff top. That happened in early June.
You can use the VIX to warn you when to exit longs. If you're a volatility trader, you can use the VIX to trade VIX ETFs like UVXY/SVXY. The former is easier. The latter requires you to seriously study the VIX for a while.
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