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VIX Analysis

Ninad Deshmukh
15 Jul 0 0

The daily VIX chart shows the formation of Doji candles at the bottom and reversal. The daily RSI crossed the previous resistance level of 40. The MACD signal gave bullish crossover suggesting bullish move in VIX. So the daily chart shows the possibility of VIX moving towards 28 levels in the coming days.

The weekly chart shows the formation of wedge and reversal from the bottom. VIX may move towards the upper wedge line @ 29-30.

So VIX suggesting the bearish mood of the market and hence the high possibility of fall in Nifty-50 and Banknifty in the coming days/weeks.

VIX Gann Box:

The daily Gann Box shows a reversal from the mid-zone of time factor points. The next time factor date is Jul-21. So will VIX continue to move high till Jul-21 or it will reverse from angle point? Wait and watch.

Using VIX to spot Intraday Reversal on Indices:

VIX is a handy indicator to spot reversal during day trade.
 
Suppose the price of an index moves up and @ resistance zone watch values of VIX. If VIX starts increasing with this upmove instead of reducing, that is a high probability signal of reversal from the resistance zone.
 
The reverse is also true. If with a downfall in an index VIX starts increasing while the price is @ support, it is signalling reversal from the bottom.
 
This rule is not applicable if there is an event/announcement/news is scheduled as VIX will increase due to the uncertainty of the outcome of this event.
 

Recent examples of trade captured by me with this method:

On Jul-08, when Banknifty made a high of 23080 after 2 pm, I was observing VIX, which was continuously increasing and 23000-23050 was a secure resistance zone as it was Upper wedge line resistance. What happened after that? A big and sharp fall of 500 points in the next hour.
 
Similarly On Jul-13, when Banknifty opened Gap up and made the top of 22657 VIX was up. For banknifty 22630-50 was the resistance zone. In the whole day, we got a good fall of 600+ points.
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