As with many charts, the stochastic RSI can be a valuable oscillator to detect trend changes.
With the VIX, we can observe that when the daily stochastic RSI fast line crosses out of oversold territory, we inevitably get a strong percentage move in the VIX. Even the leftmost "blip" was a 58% reaction by the impoverished standards of those low VIX days.
We can also observe that it tends more often than not to travel all the way to overbought territory before turning back again, the two exceptions in the last 7 months being in May, where it traveled to about 50 and 60 on the stochastic RSI reading before turning back.
Two days ago it crossed up from oversold and is presently at 42. Thus, we can conclude one of two things, I believe:
1) It will abruptly turn back now and the roughly 21% rise in the VIX that we have seen so far is all we're going to get, meaning this will be the very weakest move all year, or
2) We have not yet completed this move.
With the VIX, we can observe that when the daily stochastic RSI fast line crosses out of oversold territory, we inevitably get a strong percentage move in the VIX. Even the leftmost "blip" was a 58% reaction by the impoverished standards of those low VIX days.
We can also observe that it tends more often than not to travel all the way to overbought territory before turning back again, the two exceptions in the last 7 months being in May, where it traveled to about 50 and 60 on the stochastic RSI reading before turning back.
Two days ago it crossed up from oversold and is presently at 42. Thus, we can conclude one of two things, I believe:
1) It will abruptly turn back now and the roughly 21% rise in the VIX that we have seen so far is all we're going to get, meaning this will be the very weakest move all year, or
2) We have not yet completed this move.