Technical Analysis Article Iages_1_1024x768M Technical Analysis Article Iages_1_1024x768M Technical Analysis Article Iages_1_1024x768M

Technical Update - VIX volatility Index testing key resistance - will it break it and see new year high?

Equity 2 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

On the medium-term weekly chart VIX has formed a slightly narrowing triangle over the past 10 months. Weekly RSI is above 60 showing bullish sentiment which indicates higher levels are likely.
A
 close above the upper falling trendline and above 35 could fuel an uptrend to 40 possibly higher.

Short-term, the VIX Index is trading in a steep rising channel having tested strong resistance at around 35. If VIX closes above 35 a move to the 1.382 Projection of the June-August down trend at around 41 could be seen.

However, as can been back earlier this year VIX lost momentum around 37-38. There is a risk similar situation could occur this time around.
However, RSI is showing bullish sentiment and uptrend supporting the bullish outlook on VIX. 55 and 200 daily SMA’s are both sloping upwards indicating underlying bullish sentiment.
If VIX closes below 28.50 down the short-term uptrend has been put on pause. Below 22.60 it has been reversed. An indication of this scenario to play out would be if RSI closes below its lower rising trendline.

VIX w 11oct
Source: Bloomberg
VIX d 11oct
Source: Bloomberg

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