Last week the XIV moved up into the 83.07-93.56 resistance zone before turning back lower hitting a low of 76.07 on Tuesday, September 5th. Since this low, we have seen the XIV move back higher in what is so far counting best as a corrective wave structure. This move higher has held the 76.4 retrace of the move down off of the September 1st high. We have, however, yet to see further follow through to the downside, thus not yet giving us confirmation that we have indeed begun the next swing lower on the XIV.
While I always keep an eye on the spot VIX charts, I typically defer to the chart that I am actually trading in regards to the price levels. I do have to note that price action on the spot VIX chart has been extremely interesting over the past several weeks.
After topping on August 11th at 17.35, the XIV had retraced down to a low on September 1st. This low hit both the 88.6% retrace of the initial move up off of the July lows as well as the 100 extension of the initial move down off of the August 11th highs. These are both common Fibonacci price levels to hit during corrective retracements.
When we see price levels converge and then turn within a few ticks of key Fibonacci levels, it gives us further confirmation that we are indeed dealing with a retracement from a previous initiation move, rather than just a local bottom. In this case, that initiation move began with the low July lows and ended with the August 11th high at 17.35.
This post was published at GoldSeek on Sunday, 10 September 2017.