What the dollar shares with the volatility index: odds of pushing higher

The U.S. dollar and the volatility index (measured by VIX) look like they have something in common - the likelihood of pushing up to higher levels. Looking at my VIX chart (pulling it from my UBTNB3 site where I posted it a little while ago) and my chart of the dollar - both shown below - you can see where they've reached levels often associated with some consolidation, depending on the strength of the trend. These include not only the standard moving averages such as the 50-day and 200-day simple moving averages, but also trendline and Fibonacci-based levels.

As I indicated with charts I posted during the day (and as indicated by the ChartsEdge Market Map for today before the market even opened), there were reasons to think that the strong movement this morning would be subject to some pullback or consolidation. That's even aside from the types of movements common going into opex (which is tomorrow).

My personal working hypothesis - which is always subject to testing and revision against the realities of what the markets hand to us - is that the dollar (and US Treasury bonds, for that matter) will move to a higher level around or above 91, and that the VIX will also continue to strengthen but without going to higher highs. And meantime, that the equities indices as measured by the Dow Jones Industrial Average, the S&P 500, the Nasdaq, and others (such as the NYSE, Russell, etc.) will at minimum break under SPX 800 to test close to the November 2008 lows ... or will slide under those lows to carve out lower levels.

My previous working hypothesis during late November and December had been that the equity markets would head up higher, with the S&P 500 reaching at least 1060 and perhaps the 1198 area. Several factors led me to change this view. If you've been reading my work here during and since late December, you probably understand this. I'd also like to point out that the S&P 500 fell well under the 843 level this morning, and returned to that area by the end of the day - making it look like that level was indeed significant, but bearish that it was broken ... "trading away" from this level looks to me like the right thing to do, and that another loss of this area will help confirm that much lower levels are ahead of us.

I'd like to add that this looks very consistent with what Tony Caldaro is talking about with his Objective Elliott Wave count and 848 pivot. I think he's seeing the indicators as not fully confirming a downtrend yet. While I think that the indicators are bearish, but can agree that it's theoretically possible that the equities markets could find support here, along with VIX and the dollar not being able to mount above the resistance levels indicated on my charts (below) ... I just read the charts as showing the dollar and VIX are strong enough to do that, and that equities are weak enough to continue rolling over and downward.

For the short term (meaning the next few days), it looks to me like both the dollar and VIX need to cope with a convergence of the trendlines and Fibonacci levels in this area, and then are likely to move higher. This would be consistent anyway with the action of an opex Friday and its following Monday. Still - with the banking index plumbing new lows today, how much longer can it be before the general equities markets also weaken further? My guess is not very long.

Here are the charts (my notes on the dollar chart are in black since it's already rather busy with my standard markings in blue and other colors):