VIX analysis shows that market volatility recently moved to its second-highest level on record this month, with the VIX trading just above the 100.00 level.
The Federal Reserve’s recently announced QE programme has helped to reduce volatility somewhat. However, the VIX is still trading above the 2015 spike high around 53.00.
VIX medium-term price trend
The CBOE volatility index, commonly known as the VIX, recently spiked to its second-highest level ever, around the 100.00 level.
Last week, the announcement by the Federal Reserve to implement an unlimited bond-buying programme helped to reduce volatility, as a financial markets crash was averted.
VIX technical analysis shows that market volatility is likely to remain elevated while it trades above the technically important 2015 spike high.
The daily chart shows that the 2015 spike high, around the 53.00 area is the key area to watch over the medium term.
Over the medium term, the VIX could trade in a much higher price range if the 53.00 level is continually defended by buyers.
VIX short-term price trend
VIX analysis highlights that the short-term bullish trend in the index remains in place while the price trades above the 48.00 level.
The recent pullback from the 100.00 level has caused the VIX to form a bearish head and shoulders pattern on the lower time frames.
Looking at the size of the pattern, it is indicating that the VIX could move towards the 40.00 level over the coming days and weeks.
Traders should be mindful that the neckline of the bearish pattern is located around the 70.00 level, which means that the bearish pattern has already been triggered into action.
VIX technical summary
VIX analysis shows that the volatility index is likely to remain elevated while trading above the July 2015 spike high. A bearish head-and-shoulders pattern is now in play across the lower time frames.