Always consider hidden risks
The VIX/ Gold Correlation US Dollar and SP500: Expecting Higher Volatility Ahead ?
October 8 ( From TradingView )
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In these still too complacent times, it is interesting to look the behavior
( correlation ) of the VIX and the Gold in relation to the US Dollar (USD-DXY)
and the Mighty SP500 Index.
As shown by the charts below, this correlation tells that the risks have not started
to be fully priced into the foreign exchange market yet in terms of volatility:
expect more volatility in the US Dollar and SP500 in the next few sessions...
VIX/GOLD correlation getting below the -0.60 zone on October 7
and VIX at 18.40, near its 200 DMA ( Day Moving Average ),
indicating higher volatility ahead...
Observe the US Dollar last previous bottom ( on September 17 2015 ) at the Support Trendline from a Wedge that started back from August 7 2015 ( First Chart below - Grey Lines - Bottom Panel ) ; VIX/GOLD correlation was then near the critical zone of 0-.60. In that case, USD started a huge move in a higher Volatility set up; looks like the same pattern to me today. ( See first chart below - Red and Grey Trendlines.)
The US Dollar Index is within a Wedge and near the Support Trendline: Breaking that level will increase tremendously the Volatility of all US Financials Assets. ( See first chart below )
For the SP500 index, it started a Bullish Trend within a Channel that started back on August 24 and already at the Resistance Trendline. Like the US Dollar, on September 17, it did reverse when we had the VIX/GOLD correlation near the critical zone of 0-.60. ( See 2nd chart below - Grey TrendLines. - Bottom Panel )
So both the US Dollar Index (DXY) ans the SP500 are within a technical set up that call for a higher Volatility environment as history suggest according to the VIX/GOLD correlation.
The VIX/ Gold Correlation US Dollar and SP500: Expecting Higher Volatility Ahead ? $SPY, $SPX, $VIX, ,
$GLD, USDX #Trading #vix #gold #SP500
VIX ( Top Panel )
VIX over Gold Correlation ( Middle Panel )
SP500 Index ( Bottom Panel )
VIX ( Top Panel )
VIX over Gold Correlation
( Middle Panel )
US Dollar Index ( DXY - Bottom Panel )