The most important index of all on TradingView

The most important index of all on TradingView

For intraday traders, the VIX is the most important indicator of all as it reveals sentiment through the prism of options, puts and calls.

00:17

Introduction to VIX and daily chart analysis

00:17

The speaker demonstrates how to pull over and display the VIX indicator on a chart. They attempt to switch between different screen views and chart arrays, apologizing for some mistakes along the way. The focus shifts to examining the daily chart of the VIX to better understand its current position.

00:55

VIX declining slower than equities rising

00:55

The discussion focuses on the behavior of the VIX index, highlighting a disconnect between the VIX and equity markets. While equities surged higher, the VIX was declining from recent highs but not as quickly as expected. Normally, when equities rise steadily, the VIX remains low, around 10 to 12, reflecting a natural resting state indicating increasing risk appetite and market complacency. The segment explains this dynamic and the unusual pattern observed in the VIX relative to the equity rally.

02:13

V-shaped recovery in equities vs VIX behavior

02:13

The segment discusses the market’s reaction to the COVID-19 pandemic, highlighting a sharp plunge in equities followed by a strong V-shaped recovery, particularly in the NQ index which has reached new highs. However, this recovery in price action was not mirrored by the VIX, which remained elevated around 25 instead of returning to its typical resting levels in the low teens. Despite significant upward movements in the indices, the VIX has shown sluggish, narrow declines without strong momentum, indicating a disconnect between market volatility expectations and price performance.

03:26

Disconnect signals upcoming market correction

03:26

The speaker discusses a disconnect in the market where prices have not been falling despite other indicators suggesting a correction was due. By analyzing multiple timeframes ranging from one minute to daily charts, including volume, price, and anomaly analysis, they confirm that a market correction is indeed occurring. The use of trend monitors and trend dots on various indices helps clarify the current market trend, which is valuable for intraday traders across different assets, including spot Forex.

04:22

Intraday risk balance and VIX as sentiment indicator

04:22

The speaker explains that trading futures or any chart involves inherent risk, which fundamentally comes down to understanding the balance of risk across related markets. Profitability depends on recognizing how money moves between seeking reward and safe-haven assets, with this dynamic constantly shifting on an intraday basis. The VIX index serves as an immediate indicator of market risk sentiment, particularly through the lens of options market activity, where the balance between put and call buying reveals market expectations. Many traders struggle to grasp this concept, but it is thoroughly covered in a comprehensive forex education program, which is valuable even for those not trading forex as it teaches critical relational market principles.

05:20

Forex market signals risk disconnects

05:20

The speaker discusses how the Forex market often signals important market behaviors and disconnects that eventually affect broader markets. They emphasize that the Forex market reflects risk more than anything else, highlighting currencies like the Swiss franc, yen, and dollar as key indicators. The recent pullback in the VIX is noted, but with the VIX rising again, equities are expected to continue declining, possibly followed by a small rally.

06:14

VIX rising implies equities falling

06:14

The discussion focuses on the relationship between equities and the VIX volatility index, explaining that when the VIX rises, equities tend to fall, and vice versa. A minor correction is noted on a one-minute chart, illustrating a brief rally in equities as the VIX falls. The speaker highlights a transitional phase where the VIX’s bullish trend is confirmed, with changes in trend colors indicating shifts in market sentiment.

07:29

Trend monitor confirms primary bullish VIX phase

07:29

The discussion explains the market trend cycle of primary and secondary phases, emphasizing a bullish primary trend for the VIX, which corresponds to a bearish phase for equities. The explanation includes a pattern of primary and secondary movements, demonstrating how the bullish phase of the VIX remains dominant. Additionally, a volatility indicator is introduced, which tracks price action relative to the average true range. This indicator suggests that when price moves outside this range, the market is likely to enter a congestion phase or reverse. The current situation shows the volatility indicator hitting a trigger point, indicating expected market congestion and a potential reestablishment of the primary trend.

08:27

Volatility indicator signals congestion and reversal

08:27

The segment discusses analyzing a market region where volatility triggered a congestion bank reversal. It highlights the use of two indicators, trend dots and trend monitor, which complement each other. Trend dots closely follow price action and signal changes by shifting colors from gray to red and back to blue, indicating trend shifts. The trend monitor showed slight changes but no confirmed strong trend, as it fluctuated between bright and darker red without a darker blue confirmation. This analysis is applied to oil price movements, noting a developing reversal and an upward climb despite falling indices.

09:24

Trend changes and oil market reversal

09:24

The speaker discusses recent market trends, noting traders’ confusion about a shift in trend indicators, which have changed colors from dark red and dark blue to bright blue, signaling a potential reversal. These changes are more apparent on shorter timeframes like three and four minutes but not yet visible on longer intervals such as ten, fifteen, or thirty minutes. The analysis highlights a buying reversal pattern, specifically a hammer candle with good volume, observed when overlaying different timeframes. The focus then shifts to the Nasdaq 100 index, where a small rally is seen, likely reflecting patterns in the VIX, showing a transition from a bearish phase to a classic volume price analysis rally.

10:25

Weak rallies and bearish trend confirmed for equities

10:25

The speaker discusses a rising market with falling volume, indicating weakness despite attempts to push prices higher. They analyze multiple timeframes, including 5-minute, 10-minute, and 15-minute charts, noting consistent bearish trends. The bearish sentiment remains dominant, and the speaker prepares to switch charts for further analysis.

By Anna Coulling – creator of volume price analysis