VIX's Crazy Revenge 9/12/2020
VIX at the daily view.
In my recent post, I said that the VIX is like my crazy ex-girlfriend. It acts calm for a while but secretly plotting ES' demise. By the time the ES realized what was going on, it's too late.
When the VIX was making the its third higher low, that was my warning sign to go all cash. The VVIX confirmed that these higher lows were legit. That's how to protect any long positions. The VIX and VVIX can act as an "hourglass" for traders to time the exits of their longs.
Now, the VIX is continuing its volatility dance. Supports have moved since we are in a different phase. Liquidity is neutral at this point, so the VIX will not be held down as much as before. Usually, there is a subsequent spike about 5-7 trading days after the first spike. Since liquidity is not as strong as it was before, I can be a lot more confident when scaling in VIX longs.
Judging by that subsequent resistance (light blue line), the VIX should start making its move around September 15-17.
However, this subsequent spike needs 3 other conditions with it. 1) The dollar strength must be ready to sustain its rally or make another breakout. The DXY now may be forming another IHS pattern. 2) Liquidity doesn't miraculously recover. 3) The VIX doesn't break that second dotted line. Really, the dollar strength is unknown factor at this point.
The FOMC meeting would be an inflection point. We can expect a pump right before Jerome Powell speaks. Usually, there is a selloff afterwards.
In my recent post, I said that the VIX is like my crazy ex-girlfriend. It acts calm for a while but secretly plotting ES' demise. By the time the ES realized what was going on, it's too late.
When the VIX was making the its third higher low, that was my warning sign to go all cash. The VVIX confirmed that these higher lows were legit. That's how to protect any long positions. The VIX and VVIX can act as an "hourglass" for traders to time the exits of their longs.
Now, the VIX is continuing its volatility dance. Supports have moved since we are in a different phase. Liquidity is neutral at this point, so the VIX will not be held down as much as before. Usually, there is a subsequent spike about 5-7 trading days after the first spike. Since liquidity is not as strong as it was before, I can be a lot more confident when scaling in VIX longs.
Judging by that subsequent resistance (light blue line), the VIX should start making its move around September 15-17.
However, this subsequent spike needs 3 other conditions with it. 1) The dollar strength must be ready to sustain its rally or make another breakout. The DXY now may be forming another IHS pattern. 2) Liquidity doesn't miraculously recover. 3) The VIX doesn't break that second dotted line. Really, the dollar strength is unknown factor at this point.
The FOMC meeting would be an inflection point. We can expect a pump right before Jerome Powell speaks. Usually, there is a selloff afterwards.
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