Big Market Down day! What is next? What does Ichimoku forecast?

Big Market Down day!  What is next?  What does Ichimoku forecast?   We have been using the $VIX S&P Volatility Index to determine the direction the US Stock markets for close to 2 years now.    The $VIX has an inverse relationship with the stock market.   If the $VIX goes up, the markets go down and vice versa.

In this article, we solely analyze the $VIX to determine what the probabilities for the next couple of days to weeks.

Below is monthly chart provided by eSignal. Since the beginning of 2016, we have in two zones.  The bullish zone which is between 12.77 and 20.74 and the bearish zone which is between 20.74 and 32.21.   Since March, we have been consolidating in the bullish zone going back and forth between 12.77 and 20.74.

The 20.74 is now a major resistance because the short term and long term Ichimoku resistance are at this level now.   This resistance is stopping the market from going down drastically.    As long as we stay below this resistance, the market will remain bullish (consolidating or trend).

2016-10-11_184737_monthly

Below is the weekly chart.  It is an “ugly” chart.     The key thing to note is that there is another resistance at 15.77 which has formed in the last two week.    We will examine the daily time frame to see if it has a resistance level too at this value.   If so, it will be a major resistance.   If not, this resistance can be ignored.

2016-10-11_184653_vix_weekly

 

Below is the daily chart.     The daily has the same resistance too so there is a iMTF™ resistance.   This shows resistances are going lower which is good for the bullish side.

The short term consolidation pattern is now between 12.77 and 15.77 which is defined by the Daily time frame.    As long as don’t close above 15.77, the markets will remain towards to the bullish probabilities.

 

2016-10-11_184815_vox_d

 

Below is the Daily chart for the $ES Emini Sp500 chart.

2016-10-11_185905_es_d

No one has a “crystal ball” so the only thing we can do is to determine the key Support/Resistance levels and now the probabilities behind them.

If you would like to learn how to trade like an institutional trader or learn more about our multi-timeframe email alerts, go to www.ichimokutrade.com or email us at info@eiicapital.com

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About the Author Manesh Patel