Weekend Stock Market Analysis By Amateur Investors | June 10, 2017
Both the VIX and VXV are exhibiting a Wedge type pattern. Furthermore both encountered resistance 4 weeks ago at the top of the Wedge (points A). Typically a Wedge pattern is followed by a strong reversal of the overall trend. In this case, since the Wedge has been trending to the downside, one would expect a strong reversal to the upside at some point.
A longer term chart of the VIX shows that move up to the downward sloping trend line from the late 2008 peak is certainly a possible target which is in the mid to upper 30's.
Finally if the Wedge pattern in the VIX continues for a few more months the next level of resistance in the S&P 500 would be around the 2485 area. This level is the 200% Extension Level calculated from the 2007 high to the 2009 low. Notice past corrections (points C to D) developed from the 161.8% Extension Level and at the 78.6% and 61.8% Retracement Levels.
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