Trading the trend: long VIX
Since several US equity indices are displaying negative divergences on their daily Relative Strength Index (RSI) oscillators, a possible corrective move lower may lead to a spike in volatility.
This is why we would like to go long the VIX with a stop loss below the December low at 13.70 and an upside target at 16.50.
(AI Video Summary)
Previous USD/CAD and Nasdaq 100 trading outcomes
In this week's "Trading the trend", Axel Rudolph talks about his recent trading experiences and offers recommendations for future trades. He first discusses a trade he made on the USD/CAD. He went long on 14 February and was making a profit until he was stopped out last week. Despite this setback, he still believes that the trade has potential for gains and would continue with it if he hadn't been stopped out.
Next, he mentions another trade he made on the Nasdaq 100. He entered the trade at a good level and has seen the value go up. However, he noticed something called negative divergence, where there is a new high in value but the relative strength index shows a lower high. This indicates that there might be a drop in the value of the Nasdaq 100 in the next few days. Therefore, he recommends selling the trade and taking the profits before new information is released tomorrow that could affect it.
This week's trading trend suggestion
Lastly, Rudolph gives a new trading suggestion. He recommends going long on the VIX index. This means he expects the VIX index, which measures the volatility of the US equity markets, to go up if the markets decline. He sets certain levels to determine when to exit the trade, like a stop loss below a certain value and an upside target at another value. For this specific trade, he's set his stop loss below the December low at 13.70 and his upside target at 16.50.
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