VIX - I LIke this Range

I've been staring at the VIX chart for about a half hour tonight trying to be at "one" with it and seeing if it would give me a sense of where it wants to go.

The opposing tails on the daily chart over the past few days are showing continued indecision, but by staying up at these levels it seems to be more of a bullish sign.

What concerns me is what the charts are telling me about the ability for the VIX to potentially STAY at these lower areas. As you can see on the chart, over the past 8 months, the VIX has been in constant flux moving higher and higher every time it formed a new higher low. It could certainly be argued that the VIX is forming a new lower low and could continue lower, but given the current world economic climate, I am looking more for an unsustainable low on the VIX at an extreme area like 19 or 18 that would signal for me an extreme overbought condition similar to what we saw in late December. Fortunately I saw that December move for what it was and was able to take advantage of it with so low risk entries on some bearish trades. I see the same low risk scenario setting up here. An exhaustion gap down to 18 or 17.50 would be even better.

As for the bulls, if the VIX is able to stay below 21 and settle in the 19 to 16 range it could pave the way for a sustainable rally.

I will keep an open mind and trade the charts, but the pattern here so far suggests that the VIX could easily move back up to the 24 range (bearish). Note the bottoming tail on Monday's candle.


VIX Daily Chart: (BLUE area is my estimate on May's VIX range)