VIX Volatility Index ~ Trend Analysis (2H Chart)

12 de nov. de 2023

VIX chart mapping/analysis.

Always been a firm-believer in strong negative correlation with SPX.

Key is not matching SPX highs with VIX lows ie "catching the bottom" - it should be used as a supplementary indicator for overall market direction, by identifying key support/resistance areas for trend switches that aids you in developing a Trading Edge.

Chart Example:

• October 2022 peak in VIX marked (temporary?) bottom in SPX
  
• VIX unable to break above ~34 resistance zone after multiple attempts = gives way to lower highs & lower lows (change in trend)
  
• SPX responds by making series of higher highs & higher lows
  
• VIX bottoms around July 2023, unable to break below ~13 resistance zone (ie trend switch)
  
• SPX peaks in July & proceeds to pull back until recent reversal - coinciding with dramatic drop in volatility
  

This is by no means a done & dusted chart - after all it's called the "Volatility Index" lol.

It will require ongoing tweaking, back-testing & confluence with SPX TA work, as well as vigilance of evolving macro-economic events which get rapidly priced into both indices.

Good luck :)


Note: "SPX TEMP BOTTOM horizontal line should be adjusted higher to sit on VIX peaks - can't edit chart & cbf re-publishing...but you get the idea, cheers.