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M N's avatar

Super helpful chart on the ES VIX correlation and how to look at the convergence/ divergence :) appreciated

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AgentQ's avatar

Thank you! Question for you: when the VIX breaks the resistance or support levels, do you want confirmation with a 30 minute candle close above/below that level or should you wait for a higher time frame?

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Smashelito's avatar

The main thing I monitor is the correlation between ES (final upside/downside target) and VIX (support/resistance) for potential confirmations and divergences immediately upon breaking.

If ES breaks its final downside target and VIX breaks its resistance (confirmation), that's the only confirmation I need to be cautious buying the dip. If ES breaks its final downside target and VIX has not breached its resistance (divergence), that's a piece of information to be cautious shorting in the hole etc.

I would like to emphasize that while the correlation between the ES and VIX levels is a very useful tool for measuring market strength and weakness, it should be utilized in conjunction with your own strategies and not relied upon solely.

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Milli's avatar

Thank you, buddy! Another exceptional day, and your DEC levels were again at play.

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Frankytrade's avatar

Thank you Smash! Excellent work!

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