VIX Analysis April 2015 (D,M)
Created on Wednesday, 01 April 2015 02:03
Written by Austin Galt
The VIX has continued its slow burn but I now feel it is about to explode in a big way. Let’s investigate using the daily and monthly charts.
VIX DAILY CHART
We can see the potential for a “three strikes and you’re out” low formation denoted by the numbers 1, 2 and 3. We already have the first two strikes in place and that may well be it. However, I still give a chance to a third strike low to form.
The lower indicators, being the Relative Strength Indicator (RSI), Stochastic and Moving Average Convergence Divergence (MACD), are all likely to show a triple bullish divergence if price does in fact make a third marginally lower low.
The Bollinger Bands show price toing and froing between the lower and upper bands and I favour one last move down to the lower band before the uptrend really gets going.
I have drawn a horizontal line to denote a double bottom at the 11.52 level. This is a bullish double bottom with the trend and any move down now should not trade below this level. Doing so would likely nullify all this analysis. I very much doubt it happening.
Let’s now look at the monthly chart.
VIX MONTHLY CHART
We have been watching the support from the Parabolic Stop and Reverse (PSAR) indicator and once again this trusty indicator has come to the fore. Support, denoted by the dots, stood at 12.08 for the month of March and the monthly price low of 12.54 was just above. Nice. The dots will be around 12.40 for the month of April so it is still possible for price to trade marginally below the March low and still be held by this indicator support.
The Relative Strength Indicator (RSI) is showing a pattern of higher highs and higher lows which gives me confidence price is about to explode higher.
The Moving Average Convergence Divergence (MACD) indicator still has a bullish bias with the blue line marginally above the red line. This is on top of the multiple bullish divergences already in place.
I expect the BOOM move is now upon us. Time to buckle up!