Volatility index (Expo)

This example shows the possible use of the Volatility index (expo) in combination with trend channels

General concept

With the volatility index a possibility for a reversal or pullback can be found. When such an indication occurs it is important to look at price structure. When the structure looks ideal for an entry a candlestick pattern or the use of another entry indicator can confirm the exact entry point.

The example

In the following examples the criteria used are as follows:

• A long/short signal from the Volatility Index appears

• Price is in a trending channel

• Price is on the lower side of the channel for longs

• Or the price is on the upper side of the channel for shorts

• Bonus: Keep in mind that for example on a rising channel longs should be wagered in higher value than a short signal in an uptrend

• Optional: In the following examples there will also be a few specific entry examples based on Swing High/Low methods. Those are not in any form required for the general concept of the examples but are shown to make the examples more concrete. Any prefered entry method can be used and personal preference is always a serious point to adress in tradingstyles.

A more specific entry point for a Short scenario based on the previous BTC chart example

Another entry example based on candlesticks

A specific entry example for a Long signal (Any preferred entry method can be used)

Example on Gold (Keep in mind that no trend lasts forever so neither do the trendchannels)

Example on GBP/USD

Settings

In the shown examples the settings of the volatility index are all default except for one setting. The 'Peak sensitivity' setting has been changed from 7 > 6. By changing this setting the amount of signals created from the Volatility Index increases, but thanks to the use of channels the increased amount of signals can be filtered accordingly.

Settings of the Volatility Index (expo)

For the creation of the channels an inbuild feature of TradingView has been used named the 'Regression trend'. This tool can be found in one of the drawing tool menus. The channels can also be drawn manually with any other tool.

First drawing tool menu on TradingView contains the 'Regression Trend'

Disclaimer: This content is not financial advice and is for entertainment and educational purposes only.