As US equity markets continue to defy gravity and move inexorably higher, so the VIX slides ever lower as market complacency takes hold with risk on appetite continuing to remain firmly on the menu.

And the daily chart for the VIX (VIX, quote) really tells its own story with the volatility of the Brexit shock waves now well and truly calmed, normal service has been resumed. The UK vote saw the VIX rise sharply to a high of 26.72 before reversing into a sustained waterfall, which has since seen the index close below the key support level in the 12.70 area, as denoted with the blue solid line on the daily chart.

This is the area which held firm in the past, and provided solid support earlier in the year, and capping further gains for US markets (SPY, quote) as a result. In addition, the volume point of control is now firmly above the current price action in the 14.00 area and providing further downwards pressure on the index with the trend monitor confirming the bearish picture.

Following the breach of VPOC the VIX now looks set to move lower still with the potential to achieve single figures in the medium term, and for confirmation of potential support levels, we need to move to the weekly chart.

The key support level here is now in sight at 10.88, a price point last seen in mid 2015, and which provided the springboard for a sharp move higher, but as complacency reigns, so this level is likely to be tested, and if breached, opens the way for a move to single figures. It is at which point the alarm bells will start to ring, and could even be the point at which the ‘big short’ bears may finally be proved right…..at last!

I guess if you call a top often enough, you are bound to be right at some point! For volume traders, the real truth lies in volume price analysis, and when the selling climax does finally arrive on the indices , it will be clearly signaled on the slower time frame charts with climatic price action and an extended distribution phase. However, this extreme scenario is not on the horizon at present, so for the time being, it’s steady as she goes with the fear index continuing to sink ever lower.

Anna Coulling is a trader with over 16 years’ experience and founder of AnnaCoulling.com