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In September we talked about a spike set-up building in $VIX with risk of a breakout above the wedge trend line:
After weeks of chop and consolidation this spike has finally occurred breaking above the wedge pattern:
The context may be important signaling a shift in the volatility regime. Recall we had a descending edge building in 2017 that busted to the upside in early 2018. Since then a 2nd wedge was build on top of the previous one with the previous top trend line forming support throughout 2018.
This most recent spike has now broken above its upper trend line as well and found resistance at the top of the 2 hour RSI as $SPX has found support at its lower trend line:
As long as $SPX can hold its trend line support $VIX may retreat to retest its broken trend line. But be clear: This pattern has broken to the upside, signaling the calm of summer is over. And, as we saw in February, wedge breaks can be quite significant.
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