I’ve been using this chart to track the Volatility index for a long time. In the past the area between 11 and 12 has acted as a reliable floor of support. Short lived spikes and historically low readings suggest that there is little fear in the “Fear Index.” But that could be changing.
It is too early to be sure but we may be establishing a new and higher zone of support.The area situated between the 14 and 15 levels was tested several times last week. On Tuesday it was penetrated early in the session and recovered forming a strong looking hammer candle. Hammer candles are considered bullish and are often reversal indicators.
Volatility spikes have been shorted lived in the past and generally volatility has been historically low. The most recent spike up was brief but it penetrated the long term downtrend line going back to August. Now the index looks to be forming a higher basing platform outside of that important downtrend line.
This could be a first sign that there may be a little fear in the “Fear Index.”