VIX unable to break through key resistance level
S&P 500 Volatility Index (VIX) Technical Analysis Report for Jul 31, 2020 | by Techniquant Editorial Team
VIX finished the month -19.62% lower at 24.46 after losing $0.30 (-1.21%) today. Trading $1.62 higher after the open, the VIX was unable to hold its gains as the bears took control ending the day below its opening price. Closing below Thursday's low at 24.64, the stock index confirmed its breakout through the previous session low after trading up to $1.09 below it intraday.
Daily Candlestick Chart (VIX as at Jul 31, 2020):
Friday's trading range has been $2.86 (11.54%), that's slightly below the last trading month's daily average range of $3.05. Weekly volatility is also lower, being slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for VIX.
One bearish candlestick pattern matches today's price action, the Bearish Spinning Top. The last time a Bearish Spinning Top showed up on July 16th, VIX lost -8.29% on the following trading day.
Unable to break through the key technical resistance level at 26.11 (R1), the index closed below it after spiking up to 26.41 earlier during the day. The failure to close above the resistance might increase that levels significance going forward.
The trend is clearly bearish, showing an intact downtrend in the short, medium and long-term.
Further selling could move prices lower should the market test June's close-by low at 23.54.
Among the four market conditions that our pattern recognition engine identified today, the statistics for the Support/Resistance based market condition "Bounced off Technical Resistance R1" stand out. Its common bearish interpretation has been confirmed for S&P 500 VIX. Out of 525 times, VIX closed lower 58.86% of the time on the next trading day after the market condition occurred.