Top 5 Weekly Trade Ideas #1 - VX Falling Wedge

7 days agoI posted a similar chart last week, but as I'm looking at things after today's action I still think this is the most important thing in the market right now so it's going at #1 even if I don't plan to trade it directly. I wouldn't recommend trading VIX or UVXY, maybe VX futures but that's not for me.

Instead, I used the VX futures to determine direction on ES. This will make things very simple if we actually move this week unlike today. VX has been hanging around even throughout the recent rally to ATH. I think this is noteworthy, but still need confirmation it's going to continue to stick around and potentially gain strength.

This pattern gives us the confirmation we need, it should tell all. If we get the upside break and it can take out the 19.20 level, I would expect it to continue up to at least 22.60. That's the recent swing high and is also just below the flag pole target. If VX fails and falls below the wedge, that would also mean it broke below 16.45, which is the line in the sand. If VX can't hold there, it's time for more risk on.

TLDR:
VX below 19.20 = bullish for ES
VX below 16.45 = really bullish for ES
VX above 19.20 = bearish for ES
VX above 22.60 = really bearish for ES