Volatility is on the move. In today’s update, I want to show my expectations of where price should go, and why. When volatility spikes, markets tank. We have had extreme lows in volatility, and a short term correction was inevitable. But what else is in store?

Downward pressure

From the daily ES chart (S&P 500 e-mini), we see increasing volume and decreasing prices. Price has reached the weekly upper trendline, as shown in yesterday’s update. This should act as short-term support, as we see active demand in this area.

Also, we expect price to possibly retrace back up to the 3121 area, before continuing it’s route back down to 3031ish. This theory is supported by the upper trendline on the CBOE Volatility index ($VIX.X). Applying Hawkeye indicators to volatility has proven to be very enlightening.

The Hawkeye Perspective

With a phantom isolated high in place, we expect to see 3-5 daily price bars of correction. We also expect to see 2958 area hit IF our lower demand zone of 3020 is broken.

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