Volatility Futures, VXX, UVXY, VIX

Things are getting more and more interesting.

Last night I had wanted to post several examples, specifically MCP and why we didn't take the position which was good as it did not do what we wanted it to do to enter a position and VXX/UVXY in which I explained exactly what I'd be looking for, but... as I wrote in last night's "Daily Wrap"

"VXX was another,  in this post  I outlined exactly what I expected from VXX to open a long position/call position today including the following...

"the only thing holding me back right now would be looking for a head fake move below that triangle"

This is something we see 4 out of 5 times before a reversal, I jumped the gun a bit early, although I think the position will be fine as there WAS the accumulation on the head fake move that MCP did not have, but it is the concept that we follow that showed again to be the correct way to enter the position."

Although, as I said, I still expected the position in VXX / UVXY to be fine, this morning some interesting developments are taking place there too. "If" these developments continue on this course, I'd consider broadening the scope of that position and would certainly highlight it as a new position for anyone who might be interested. Don't forget, we did just see the Buy signal in the VIX which has only happened twice this year, the first one was beautiful.

 This is what the "reversal process" looks like in context and proportion, at the bottom before a reversal we usually get some technical pattern that retail technical traders can be sucked in to and a head fake move, it's that head fake move where we usually find the best entry, the lowest risk and highest probabilities and that was the plan for VXX yesterday, it was the plan for MCP and while MCP did the first two things, it didn't confirm on the third, that's what VXX is doing now and why I said last night, "I think the position will be fine".

Here's the close up, the plan was to wait for a head fake move BELOW the bearish descending triangle that retail technical traders will bite, unlike MCP though, VXX/ UVXY are confirming a head fake move, but with some of the charts like the one below, I would have said the probability was at least 80% the move would be a head fake for VXX, not quite the same for MCP as that was only envisioned to be a 1 or 2 day call position.

MCP didn't have this kind of power behind it in the near term I believe it will after a decent pullback, but the point is VXX / UVXY and this 60 min VERY positive divergence.

Here's the break that I said above in last night's post, I didn't wait for and this is why I wanted to post this last night as a "CONCEPT" because they prove to be so useful and consistent.

The other or important part of the concept is that we see positive divergences on the break below, that's what distinguishes a break from a head fake and an edge from just another break like MCP saw yesterday.

We do wait for confirmation, just a different kind.

UVXY 2 min is seeing migration of the positive divergence so it is on its way so far.

I want to see more positives and longer timeframes and there is still a reversal process, although much shorter, it should be in proportion to the break below support.

If things keep developing as they have started to and I think there's a very high probability, then VXX/UVXY will make for a decent add to position or a new position for those interested, first lets get some more confirmation.