Volatility 100 Index as of 9-11-2024

The Bigger Picture – Weekly Timeframe

There has been a general downtrend from the highs in July 2024, with a few pullbacks along the way. The current price is near a recent support level around 1049, as marked by the green line at the bottom. The alternating red and green candles show volatility, with some periods of consolidation before price moves lower.

On the chart above, I added the MA and RSI indicators:

  • 20-day Moving Average – yellow
  • 50-day Moving Average – grey
  • 200-day Moving Average – dark blue

The price is consistently below the 20-period moving average, confirming the ongoing downtrend. The 20-period moving average is acting as a dynamic resistance level. Any price movement towards this line might encounter resistance, making it a possible entry point for short positions in a bearish trend. If the price manages to break above the 50-period moving average and sustain that level, it could indicate a potential trend reversal to the upside. The RSI is at 37.71, which is close to the oversold threshold of 30 but not quite there yet. This indicates bearish momentum but does not yet confirm an oversold condition. If the RSI drops below 30, it would suggest an oversold condition, potentially signaling a bounce or consolidation in the downtrend. Watch for any bullish divergence (when price makes a lower low but RSI makes a higher low). This could indicate a weakening bearish trend and a potential reversal.

Daily Analysis

The recent candles show a bearish trend with lower highs and lower lows, indicating selling pressure. However, towards the end of the chart, there's a small green candle, which suggests a possible temporary support or minor bullish reaction. This could be a potential reversal signal or a minor pullback in the downtrend. The green horizontal line at 1048.00 seems to mark a demand zone where buyers may step in, as recent price action shows that sellers have struggled to push prices much lower beyond this level. There’s no clear supply zone in the recent price action, but given the downtrend, any reversal or pullback might face resistance near the 20-day (yellow) or 50-day (grey) moving averages. The price is below the 20-day moving average, which confirms a bearish sentiment in the short term. This moving average may act as a dynamic resistance in case of a pullback. The price is also below the 50-day moving average, reinforcing the bearish trend in the medium term. The price is far below the 200-day moving average, indicating a strong downtrend in the long term. The RSI is at 35.82, which is close to the oversold level (30). This suggests that the price might be nearing oversold conditions, indicating that the downward momentum may be weakening and a potential bounce could occur soon. However, it’s not quite in the oversold range yet, so the downtrend could continue before a stronger reversal or consolidation.

A Closer Look into the Daily Chart

The week started with a continuation of the downtrend, as the initial red candles show. Saturday's candle (first candle in the orange rectangle) is a large bearish move that set the tone for the following sessions.

Midweek, a small green candle appears, signaling a potential short-lived pause or consolidation in the downtrend. However, the next candles remain predominantly bearish, indicating that sellers still hold control.

The last green candle suggests a slight rebound or a testing of the support around the 1039.06 level. This could either signal a minor recovery or a temporary pause before further downward movement. The current price level around 1039.06 might be acting as a support zone. Price retested this level several times last week, showing some buying interest here. However, the lack of a significant bullish response indicates that buyers are not yet strong enough to reverse the trend. The previous support levels around the 20-period (yellow) and 50-period (grey) moving averages are now likely to act as resistance if the price attempts a recovery. The price is well below this moving average, indicating weak momentum on the bullish side and reinforcing the bearish outlook. The distance between the current price and the 50-period MA highlights that the broader downtrend is strong. Any attempted recovery is likely to face resistance here. The RSI is currently at 35.28, close to oversold territory but not quite there. This suggests that the bearish momentum may have more room to continue but could attract buyers if it drops further into oversold levels (below 30).

H4 Analysis

Price Action

  • The downtrend continues from the beginning of November, with several red candles dominating, confirming bearish momentum.
  • There’s a notable retracement where green candles show attempts by buyers to regain control. However, each bullish movement is capped by resistance near the 20-period (yellow) moving average, suggesting that sellers still have the upper hand.
  • The recent green candles near the end of the chart display a potential bounce from the support level around 1032.63, but the lack of strong bullish momentum indicates the possibility of further downside movement.

Moving Averages

  • 20-period MA (Yellow): The price has been oscillating around this level without a clear breakthrough, acting as a dynamic resistance. This shows that the short-term bearish momentum has not yet been broken.
  • 50-period MA (Grey): Further above the 20-period MA, this moving average provides an additional resistance level, reinforcing the bearish sentiment as price has not been able to test it.

RSI (Relative Strength Index)

The RSI is at 42.42, signaling weak bullish momentum and remaining below the neutral 50 level. This indicates that sellers are still likely in control, though the RSI is not oversold, suggesting room for further declines if bearish momentum picks up.

Key Support and Resistance

  • Support: The current price is around 1032.63, a level that has acted as support. If this level breaks, we could see a continuation of the downtrend, possibly testing lower levels.
  • Resistance: The 20-period and 50-period moving averages are likely to serve as resistance in any upward attempt, with additional resistance from previous highs if the price manages to break above these levels.

H1 Analysis

Looking at the bigger timeframes, we can see that the market is heavily bearish at the moment with Volatility 100. On the H1 timeframes, we can see that the market does have strong bullish moves but is still on a downtrend. Hence, one has to be careful when taking positions on higher timeframes. Volatility 100 is very volatile, so I would not take a week position unless you have enough capital to sustain the moves that it makes.

30-Minute Analysis

On the 30-minute timeframe, the market displayed a strong respect for the 50-day moving average. Below are some key observations:

  • Despite a bearish start on the weekly, daily, H4, and H1 timeframes, the 30-minute timeframe showed bullish movement for approximately three hours.
  • A point of interest marked by a light green line was well respected by the market for nearly half of the day. To visualize this point, consider using a rectangle to indicate the range.

The market eventually retested this level once before turning bearish again. Observing the candles at this level is essential. Note how the market began creating lower highs and lower lows and started consolidating after completing the third level, failing to break to a new lower low.

For brevity, I will end this analysis with the 30-minute timeframe. Please take note of the last candlestick patterns on the various timeframes:

  • Weekly: Strong bearish candle
  • Daily: Buyers attempted to gain control, but the bullish momentum was weak, as sellers drove the price down from high to close
  • H4: Strongly bearish
  • H1: Strongly bearish
  • M30: Strongly bearish
  • M15: Strongly bearish
  • M5: Strongly bearish
  • M1: Strongly bearish

Additionally, if you check the weekly chart, the price currently sits at a significant point of interest. If this level holds, the market may range for a while. A breakdown of this level would likely strengthen the bearish trend.

Future Analysis Focus

In future reviews, I plan to analyze the session volatility, particularly focusing on the volatility 100 index movements and identifying points of interest for potential trades. Key patterns and trends will be monitored, as bearish movements often retrace to the 20-day moving average before continuing downwards. These retracement points can serve as ideal entry points on smaller timeframes.

Most of my entries are made on the 1-minute timeframe. A crucial lesson I’ve learned is to trade with the trend. While the market will always experience pullbacks, sticking with the trend provides a safer strategy. Once skilled in trading, reversal opportunities may allow for profiting in both directions.If you want to sign up for deriv, use my affilink link.

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