The Volatility Index (VIX), commonly known as the market's "fear gauge," has reached a critical juncture, testing the pivotal 2-year support/resistance level at 18.80. Following a dramatic 40% decline from its recent high of 29.20 to 17.32, the VIX has established a symmetrical triangle pattern, indicative of an imminent breakout. Major U.S. indices, including Nasdaq, S&P 500, Dow futures, and the 10-year Treasury yield, are retreating from recent rebounds, which increasingly resemble a classic "dead cat bounce" rather than sustainable recovery.
The alignment of these indicators suggests the market sentiment remains fragile, raising the probability of further downside momentum.
Technical Breakdown
Volatility Index (VIX)
The VIX is testing critical resistance at 18.80 after rebounding from the 17.30 zone. A symmetrical triangle pattern has formed, signalling potential volatility expansion.
Immediate Bullish Scenario: Holding above 18.80 targets an initial rise toward 21.25 (triangle midpoint). A break above this level significantly increases the odds of a climb to 22.80 and subsequently to the triangle's upper boundary at 25.24. Beyond 25.24, the VIX could quickly escalate toward prior resistance zones at 26.75 and the recent high of 29.20.
Bearish Scenario: A decisive break below 17.30 would temporarily alleviate bearish equity pressures but remains unlikely in the current uncertain climate.
The alignment of these indicators suggests the market sentiment remains fragile, raising the probability of further downside momentum.
Technical Breakdown
Volatility Index (VIX)
The VIX is testing critical resistance at 18.80 after rebounding from the 17.30 zone. A symmetrical triangle pattern has formed, signalling potential volatility expansion.
Immediate Bullish Scenario: Holding above 18.80 targets an initial rise toward 21.25 (triangle midpoint). A break above this level significantly increases the odds of a climb to 22.80 and subsequently to the triangle's upper boundary at 25.24. Beyond 25.24, the VIX could quickly escalate toward prior resistance zones at 26.75 and the recent high of 29.20.
Bearish Scenario: A decisive break below 17.30 would temporarily alleviate bearish equity pressures but remains unlikely in the current uncertain climate.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.