Wednesday, November 24, 2010

VIX still within channel and above trendline support

The volatility index ($VIX) is followed and traded by plenty of smart traders. Right now it's in an interesting area within a downtrending channel on my daily chart; and above an uptrending trendline on my long-term weekly chart. So the $VIX looks likely to push up significantly fairly soon, by breaking out above the daily chart's channel. I use a basic system of trendlines I developed a few years ago based on observation, and it often does a good job of showing potential turn or continuation areas. On occasion I'll incorporate Fibonacci, but the basic trendline system is based on significant swing highs and lows. It ends up rather similar to Gann angles.

If the $VIX instead falls under the weekly chart's uptrending line, that would be a major development. It would signal and confirm a very bullish development. That's something that could happen, but it looks more likely that the $VIX will move upward. Whether that happens right away, or in some trading days, that's what looks most likely.

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