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Category Archives: OVX

OVX, CBOE Crude Oil Volatility Index (INDEX)

Today, Crude oil topped out and then instantly backed off again. Since we could be heading into an oil correction bigger and longer than the bulls expect, then this OVX index should soar. I’m sure the OVX will crash through 14, but it may not do it on this trip. Any oil bear market should push this index higher, with major resistance at 80-89. I can’t help but use a few Fibonacci whole numbers, which are very close to resistance patterns as well. The low was 17.24 ending with a nice spike, so we want this number to hold.

When oil declines much more and we get a decent corrective pattern, then this OVX index, should develop a 3 wave bullish move. Many of these spikes can be ignored, but they sure help in seeing the huge triple top. The same top line also shows a big H&S pattern, with the potential of another one coming up. This is all speculation before it happens, but it must be done if we are to confirm a bottom in the next bearish crude oil cycle.

OVX, CBOE Crude Oil Volatility Index (INDEX)

I rarely look at the crude oil volatility index, but I may start to use the OVX a little more frequently. The idea is the same as any other volatility index, but it is strictly related to crude oil.  Any potential future move down in the index, would indicate a bullish phase in oil is coming. The reverse would be true if we think an upward spike in the OVX is going to happen.

We can see the recent wild spike to the upside, and then a reversal and a crash to about a 4 year low. At this time we are sitting at the 21.32 price level, and any further upside would indicate that oil is going to have a bearish move, or bull market correction. At 14 we have a huge double bottom, but if this oil bull market is going to persist, then the OVX should crash well below the 2014 low.

I would just be guessing as to how low the OVX will eventually end up, at the peak of the next big oil bullish run. I love even Fibonacci numbers and at 21,  we are dead on to a Fibonacci. 13, 8, and 5 would be the next logical sequence lows, but how long that will take could be several years or more.

The oil bull market is not over, as chances are good that oil is heading into another correction. Last week saw a huge move in gold, silver and oil, and any oil correction will now happen in early 2018.