Bad News Just Around the Corner?
Is there bad news just around the corner ???
Technical analyst agree that a falling wedge pattern is a bullish pattern. As a pattern, its bullishness just stays dormant until the breakout occurs.
It is a great pattern for technicians because its failure rate is only 10% which means it has an accuracy level of 90%.
So why are we discussing this pattern today?
Because there is now such a pattern ... a nice, two and half month long pattern.
That's the good news, now for the not so good news ...
The pattern is showing up on the VIX (Volatility Index). As you know, the VIX is often regarded as the Fear Index and the VIX moves in the opposite direction of the stock market.
Therefore, this normally positive news pattern has some very negative implications attached to it. Technically, for this particular pattern, the maximum run time before the breakout is during the third week of February. However, that is when the apex of the resistance and support lines is formed.
The reality is that these patterns always breakout before the apex. Seldom is that breakout longer than seven-eights (distance) into the pattern which would be about February 8th.
The beginning timeline for a probability increase of a breakout starts after being two-thirds into the pattern ... and that date was January 23rd. So now, we are in the breakout window area where the probability for a breakout will increase as time moves toward February 8th.
Bottom line ... market risk levels will now start to increase as we
(FYI: This chart is one of three VIX charts that are updated daily in Section 4 of our Standard subscriber site.)