Tuesday, February 02, 2016

Volatility is starting to rear it's ugly (and profitable) head again

Wedges and triangles were abounding in the energy markets yesterday and Friday and now they are ripe in the $VIX indices as well now. You're always going to see triangles and wedges showing you where moves are happening, and right now on the daily chart we seem to be entering the final wave up of this particular run in $VIX. The bullish declining wedge was broken and I expect it to stop around $29.50 to $30.00 making the neckline of our inverse head and shoulders.
What makes this potential inverse head-and-shoulders pattern particularly enticing is it may signal the beginning of a larger breakup according to the weekly chart. VXX has currently been in a condensing/triangle pattern but the momentum and the EMA's seem to be suggesting that the movement will continue upwards.