Can You Use Technical Analysis on the VIX?
The volatility index or VIX is a measure of the put to call ratio in the market. Essentially when everyone is short on the market then VIX is going up and when everyone is long on the market then VIX is going down. In the past when there were very few investors short in the market and that was when VIX rarely had any movements and technical analysis would seem useless except for the first example im providing in the first chart directly below. But nowadays in this bear market with a very high ratio of shorts compared to longs VIX has been forming very nice trends to trade. Here are some examples below.
Probably the easiest strategy when using technical analysis on the VIX is going short on the VIX when it is at historically high prices. You can see in the picture below the last few instances when VIX price reached around the $35 to $40 level. These were some of the best moments to go short on the VIX over the past several years. This is probably the easiest technical strategy when trading the VIX. Just short it when the price gets really high. I mean look at this thing. It looks like a meme stock. It goes sky high and then comes right back down.
In the next picture below you can see a chart of $VIX Index Futures(MAY4)(VXmain.US$ . In this chart you can see how VIX formed a downward price channel for several weeks. This was an amazing time to be long on the market as this S&P 500 had an amazing rally at this time. Highlighted in the chart below is a time in which the VIX broke resistance to the upside and started to trend upwards. This was a great time to go short on the market because the S&P tanked after this break of resistance.
Below is a chart of $CBOE Volatility S&P 500 Index(.VIX.US$. This one tracks VIX futures price movements but only on the intraday basis during US equity markets intraday trading hours. This ticker symbol will give you much more smooth and clear technical levels and trends to follow as compared to VIX futures charts. The chart directly below illustrates the many technical aspects of this VIX indices price action. This chart shows the time frame that immediately followed the chart directly above. After the VIX's price broke above resistance then it formed this smooth price channel to the upside. And currently the price is appearing to break down below support of this price channel. Will we get a green week next week on the $E-mini S&P 500 Futures(JUN4)(ESmain.US$ off of this break of support on the VIX?
Below is a picture of VIX futures. This is the exact same timeframe as the .VIX Index chart above. You can see how this futures chart has less clear trends. It looks like the price action is a little more choppy. But you can notice that even on the futures chart VIX is still breaking down below a legitimate trending support level. This is a bullish look for equity markets.
If you are trading these leveraged volatility ticker symbols then they more than likely will not be any clear trends. You want to stick to the main $CBOE Volatility S&P 500 Index(.VIX.US$ to find the more clear trends to trade on the volatility index. In the past trading through technical analysis on the VIX was not very reliable. But more recently in the bear market with a very high put ratio it seems like the VIX is a great tool and technical analysis.
$SPDR Dow Jones Industrial Average Trust(DIA.US$ $Invesco QQQ Trust(QQQ.US$ $SPDR S&P 500 ETF(SPY.US$ $iShares Russell 2000 ETF(IWM.US$ $VIX Index Futures(MAY4)(VXmain.US$ $Gold Futures(JUN4)(GCmain.US$ $Powershares Exchange Traded Fd Tst Db Us Dollar Index Bullish Fund Etf(UUP.US$ $SPDR Gold ETF(GLD.US$ $iShares Silver Trust(SLV.US$ $Ishares Iboxx $ High Yield Corporate Bond Etf(HYG.US$ $Ishares Iboxx $ Investment Grade Corporate Bond Etf(LQD.US$ $iShares 20+ Year Treasury Bond ETF(TLT.US$ $Crude Oil Futures(JUN4)(CLmain.US$
$TENCENT(00700.HK$ $SSE Composite Index(000001.SH$ $CSI 300 Index(000300.SH$ $CSI 300 Index(000300.SH$ $FTSE Singapore Straits Time Index(.STI.SG$ $NIO-SW(09866.HK$ $NIO Inc. USD OV(NIO.SG$ $NIO Inc(NIO.US$ $BILIBILI-W(09626.HK$ $Bilibili(BILI.US$ $Baidu(BIDU.US$ $BIDU-SW(09888.HK$ $XPeng(XPEV.US$ $Li Auto(LI.US$ $BYD COMPANY(01211.HK$ $BYD Company Limited(002594.SZ$ $S&P/ASX 200(.XJO.AU$ $FTSE Singapore Straits Time Index(.STI.SG$
$TENCENT(00700.HK$ $SSE Composite Index(000001.SH$ $CSI 300 Index(000300.SH$ $CSI 300 Index(000300.SH$ $FTSE Singapore Straits Time Index(.STI.SG$ $NIO-SW(09866.HK$ $NIO Inc. USD OV(NIO.SG$ $NIO Inc(NIO.US$ $BILIBILI-W(09626.HK$ $Bilibili(BILI.US$ $Baidu(BIDU.US$ $BIDU-SW(09888.HK$ $XPeng(XPEV.US$ $Li Auto(LI.US$ $BYD COMPANY(01211.HK$ $BYD Company Limited(002594.SZ$ $S&P/ASX 200(.XJO.AU$ $FTSE Singapore Straits Time Index(.STI.SG$
$Apple(AAPL.US$ $Tesla(TSLA.US$ $Microsoft(MSFT.US$ $Amazon(AMZN.US$ $NVIDIA(NVDA.US$ $Meta Platforms(META.US$ $Alphabet-C(GOOG.US$
$Chevron(CVX.US$ $Phillips 66(PSX.US$ $Valero Energy(VLO.US$ $Devon Energy(DVN.US$ $Occidental Petroleum(OXY.US$ $W&T Offshore(WTI.US$ $United States Oil Fund LP(USO.US$ $United Sts Brent Oil Fd Lp Unit(BNO.US$ $Imperial Petroleum(IMPP.US$ $Houston American Energy(HUSA.US$ $Indonesia Energy(INDO.US$ $BP PLC(BP.US$ $Exxon Mobil(XOM.US$
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SpyderCallOP : What do you think? @not-a-cow...
TeslaSmurf : It is not reliable for a forecast as it may suddenly change for whatever news or event, being so related to the emotions of the market, but it is affected and affects directly the SPY especially in this uncertain market. Anyway, is one of the parameters I monitor constantly before deciding the entry point on a trade on TSLL.
solo invest TeslaSmurf: In the past the vix was only used as a gauge to see if the market was feeling short or long. Now more recently it has been acting different. It might be from the high put ratio in the market. I ddon't know for sure. I should study more into the vix. But these trends on the Vix lately I’ve been looking pretty good
TeslaSmurf solo invest: Because it is based on the put and call options on the S&P 500
SpyderCallOP : right
it is the put to call ratio.
Giovanni Ayala : Net (of)
slank : need more pump on $Proshares Trust Ii Vix Mid-Term Futures (Post Rev Split) (VIXM.US)$ vixm