Part 21 Technical Analysis – Trading by VIX

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Part 21: Technical Analysis – Trading by VIX

VIX, a volatility index sometimes referred to as investor fear gauge, is a tool that shows market sentiment. Use another view and anticipate the behavior of most traders. First of all, let’s introduce the tool itself to show how it works and what values or movements are relevant.

What is VIX

Index CBOE VIX is an indicator of market volatility. Volatility indicates how quickly and how much prices change. With VTX the final value is determined by using the implicit volatility of options by index S&P 500.

High volatility occurs when a price changes quickly with one group of traders selling their assets and another one buying them. In the market, this can be observed in the wake of important news (in the case of forex typically after central bank sessions or changes of interest rates). On the contrary, low volatility is typical for nights, time periods in which price movements are minimal.

VIX development over the recent year. Since February, volatility in the market has been more intense than usual.

Trader’s interpretation of VIX

A higher value of VIX means higher volatility and hence higher uncertainty. When are traders uncertain and nervous? When there is a threat of the collapse of the system or at least a dramatic decline of prices (… can you imagine a trader being nervous when making money. ).

By the way, have you ever thought about the terms long (for buy) or short (for sell)? It’s simple – to speculate on growth is a LONG-term effort, but falls come quickly and are aggressive – SHORT.

When shares grow, it’ usually a moderate growth. Traders are calm having no reason to panic. This is because of low volatility and low VIX.

How to trade with VIX

In general, with the growing VIX, you can expect a price decline in particular in a stock market. Usually, it’s not only stock markets; forex, commodities, and cryptocurrencies are affected, too. Being a beginner at cryptocurrency trading you don’t know yet whether uncertainty in a market signal for cryptocurrencies good or bad times.

Most of you know that when markets are volatile, traders tend to resort to gold to preserve the value of an investment. Bitcoin is called digital gold and litecoin digital silver. Does this mean that cryptocurrencies behave similarly? As a kind of value preserver, will they grow? Right now, nobody is able to answer this question. Cryptocurrency fans see all things in bright colors but you would also find many skeptics. All that you can do is to wait and observe what the market will do.

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In general, high values of VIX indicator mean a potential threat and unpredictable price movements, while low VIX a stable trend. But as you know each market has two sides which means that a potential threat can be turned into a strength.

I would never use VIX as the main indicator for selling my assets. I personally see it as a complement offering a different view of the market but never the key instrument for trading. Asking me whether it is possible, I can answer it seems that it is. But I am not going to give you any specific trading strategy based on VTX.

Anyway, I feel that testing VIX makes sense. Who knows, it may turn out to be the last piece into your puzzle – your Forex trading strategy.

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More about the author J. Pro

Unlike Stephen (the other author) I have been thinking mainly about online business lately. I wasn’t very successfull with dropshipping on Amazon and other ways of making money online, and I’d only earn a few hundreds of dollars in years. But then binary options caught my attention with it’s simplicity. Now I’m glad it did because it really is worth it. More posts by this author

Part 21: Technical Analysis – Trading by VIX

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Ideas

the footprint of Bitcoin/U.S. Dollar on the weekly chart: Following patterns has been detected-: initiative movie two triangles rounded move with low volume tails (while u-turn) Parallel channel on the daily chart: 2-control lines parallel channel with value high.

Before we start please support this idea with your likes and comments, it is the best way to keep it relevant and support me. Last week Bitcoin made a new high, while almost completing three straight green closings on 1W candles. This is certainly a bullish signal, having also reached the 0.618 Fibonacci retracement level from the 10500 High, covering the largest.

You can share your LOVE, by giving me LIKES and COMMENTS: this your action will inspire me to work more and more. Hey, My dear Traders(Friends), This is my second posted an idea, the first Idea was successfully target achieved. On the parallel channel(value area) are plotted following analysis-: At the value high, 4 yellow dotted. 5 touching on the.

Friends, please support my free works by clicking LIKE button. Reasons: – Price trades in Rising Wedge – Key Level 7270 $ – Support level 6950 $ – I think price may fall at least to support Level and lower – To open short only after setup which you trade – Always do your own research before opening positions and always put SL If you have your own opinion or.

Let’s take a look at what’s happening here. From a technical perspective, we are seeing an Ascending Wedge pattern(which is a bearish pattern). Ascending Wedges are formed when the price of an asset makes a slow recovery after a Big Drop. This is the case with Bitcoin. After the huge 60% drop from 9200, BTC is making a slow recovery in the form of an ascending.

Greetings. Please leave a Like if you like the idea BTC just broke and fixed above 7000$ level. We formed a great horizontal support so the growth is expected to be continued Leaving a “like” costs nothing and really helps me out; please consider it! It’s the #1 thing I look at when deciding to work on future content. Peace Out! Not a Financial Advice

Hello guys, please support this work with the LIKE we completed two targets on previous upward wave after price reached out buy zone. now price can take a correction because the price was stopped by the resistance of the channel. However if we have a confirmed breakout of the channel’s resistance level we will go up Please follow the Trading View profile to.

Bitcoin (BTCUSD) is starting to look good weekly. What are your thoughts on this below? The recovery continues to take place. The bullish candles continue to close. The trading volume is still low. The Bitcoin Halving is yet to come. With prices moving above EMA100 ($7332.3), Bitcoin (BTCUSD) starts to look so much better. This is the weekly.

Please support this idea with LIKE if you find it useful. Price was supported by 200 MA and managed to touch the higher boundary of an Ascending Channel. In case there is a confirmed breakout of the higher boundary of the channel we can initiate a long position. Otherwise it might be a rejection case Thank you for reading this idea! Hope it’s been useful to you.

Hi friends, here my daily analytics for Bitcoin price. Reasons: – Price now trades near Support/Resistance Level – Support/Resistance Level is 6950 $ – Price trades in Local Uptrend – The best place to open long is near Support/Resistance Level – Always do your own research before opening positions and always put SL If you have your own opinion or thoughts about.

For many, this analysis for the next couple of months is likely to seem abnormal, however, I think we should keep it in mind. I call this figure “Batman” of the Market Maker, as it literally crawls in the opposite direction from the impulse on the shorts averages in this case, as well as those who catch corrections to continue the trend down. And here’s the most.

I wrote this post about 6780 area because I was sure from the whale effect that was coming in the next hours, there will be a increase to 7200+ trend and as you see now i have upload it when price are above 7200. –> As you all know i did place post before that btc will increase to 7200 , this depens on the MX effect. and i did also say that the most will not.

�� Absorbed the previous top. Finally we can see an adequate reversal, as the level of $7500 is protected by a big sell wall in the range between $7400 – $7500. Moreover, we have a non-tested support of $7000 which should be tested to call this growth “healthy”.

Possible Bulltrap as rallying on declining volume . This indicates Bearishness and not Bullishness .

Hello everyone, As you might see on the chart we are reaching the point of downtrend line. Keep eye on it if bulls can break threw or if we will get rejected (slightly bearish divergence forming on the 4h RSI) See also related.

CHECK THE POST —> UP TREND” title=”CHART IDEA BTC 8.3K long term —-> CHECK THE POST —> UP TREND” style=’background:#131722’>

this is chart are idea example. as you know from me i share most time 2 ideas: the expectation idea and the chart idea. —> this are Example chart idea. as the title says, it won’t be surprising if we go there. I have to keep checking the whale effect. and update soon with more details about expecting chart. Have good time all.

��WELCOME, FRIENDS!�� Please, watch my new video�� ��PLEASANT VIEWING TO YOU!�� ��Your opinion is so important to me, write me in the comment all that are you thinking about. �� Thanks for your support������ Subscribe and put like������ I’ll try for you❤❤ Your Rocket Bomb����

Please support this idea with LIKE if you find it useful. BTC crossed into the Horizontal Resistance zone on Daily. In case we have a confirmed breakout of the higher boundary of the zone we can initiate a long position. We might also have a correction to the support trendline, in this case we should wait for the confirmed retracement and then initiate a long.

Technicals

Profile

BTC USD (Bitcoin / US Dollar)

This is the most popular Bitcoin pair in the world. Bitcoin uses peer-to-peer technology to operate with no central authority or banks; managing transactions and the issuing of Bitcoins is carried out collectively by the network. Bitcoin is open-source; its design is public, nobody owns or controls this cryptocurrency and everyone can take part. Bitcoin price grew significantly within a short period of time making the BTC/USD pair quite popular among active traders and investors. Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.

Using VIX To Forecast The S&P 500

by Trent Gardner

Finding a trading system that beats the buy & hold method is a good find, especially in a volatile market. Here is a trading system that uses the volatility index as a forecasting tool and outperforms the buy & hold approach.

C an the volatility index (VIX) be used to predict the future of the Standard & Poor’s 500? New ideas have arisen in academic literature that suggest that combining technical analysis with the VIX can result in a predictive model that will beat the buy & hold of the S&P 500. James Kozyra and Camillo Lento tested nine trading rules and found that eight of the nine produced positive results.

The VIX is often referred to as the fear index or fear gauge. It represents the implied volatility in the stock market for the next 30 days. The VIX is calculated in real time by the Chicago Board Options Exchange (CBOE) and is a weighted blend of option prices for the S&P 500. The formula that calculates the index takes current market prices for all out-of-the-money options for the first and second nearest months.

Figure 1 shows the VIX from 2003 to October 2020. Note how it is mostly flat to down and is punctuated with violent spikes. The spikes in the data occur during times when the S&P 500 is selling off. Thus, it is safe to say that the VIX is negatively correlated with the S&P 500.

FIGURE 1: THE VOLATILITY INDEX (VIX) FROM 2003 TO OCTOBER 2020. Note how it is mostly flat to down and is punctuated with violent spikes. The spikes in the data occur during times when the S&P 500 is selling off.

Using the VIX to forecast
The most robust trading rule is a simple 50-day moving average crossover of the VIX. It was able to produce 12.7% annual returns over the period from January 1999 through July 2009. These performances exceed the buy & hold approach by 12.49%, leading them to conclude that the VIX can predict the S&P 500. For the period, buy & hold yielded a total of 2.28% or an annualized yield of just 0.21%.

The study, however, needs work to turn it into a trading system for the retail investor; most notably, the study goes long and short, based on whether the VIX is above its 50-day moving average. In addition, trading costs are not included in the study. After running the numbers through a simulation, I concluded that moving average whipsaws must be reduced and commission accounted for in profit calculations. I did not include short sales as part of the new system.

…Continued in the December issue of Technical Analysis of Stocks & Commodities

Excerpted from an article originally published in the December 2020 issue of Technical Analysis of Stocks & Commodities magazine. All rights reserved. © Copyright 2020, Technical Analysis, Inc.

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