The VIX has traveled much deeper than what I was expecting. I’m looking for a bullish reversal which will spring the trap on the unsuspecting VIX bears. In the last month, the VIX bottomed 3 times which could be a signal that tells us that the VIX decline has had enough.
When the VIX moves it can be very violent as tons of buy stops will get hit until the 4th wave top. On this 90 day chart, the golden cross has just formed so a rally will stop the VIX from creating a death cross. You can call this bottom a double H&S pattern and even add the falling wedge for good luck.
I’m looking for a big bullish move with the VIX and soar well off the top of the chart.
The commercial hedgers are stacked to the long side by a ratio of about 2.4:1 and as usual, the speculators have taken the opposite position. Both can’t be right in their direction and violence will ensue (Increase in Volatility), once this skewed trade starts to unwind.