Whaddup with Volatility?

As a frequent trader of RUT options, I always keep a close eye on the implied volatility index - RVX.  Today was a very interesting day.  I've mentioned this many times before, and have also discussed the mixed feelings about technical analysis of a tracking index like this, but I still find the technical analysis consistency to be stunning.  Take a look at this great chart:

Once again, the RVX is resting right at the support line that has held up for many weeks.   Of course anything can happen, but traditional technical analysis would signal a high probability of a reversal here.  There is a sweet lengthy hammer, which closed at it's high for the day, right above significant support.  I don't think a setup can be much more textbook than this.  Traditional confirmation would come if we exceed the high of today, in which case one might consider going long the RVX... probably in the form of selling the RUT.

Now, you might also consider the opposite scenario.  In my opinion it's far less likely, but what if we continue down in IV, below support?  That could happen (as I say, less likely I think), in which case it might be the surest sign that the bear market is tailing off.  Particularly if the RVX stays in the 40's and 30's for any period of time.  Personally, I'll be watching for the reversal tomorrow and selloff of the RUT.

Good Trading...