The market has experienced a period of low volatility since April 2025. However, beginning in August, early signs of expansion are emerging: the 30-day volatility percentile climbed from around 3% to approximately 9%. This shift coincides with a price pullback following the recent all-time high, suggesting an initial downward trend within the broader range.
While the current regime still displays compression, historically low readings in the 9–10th percentile often precede directional shifts. However, these readings alone aren’t reliable indicators for timing such transitions.
A sustained increase in Volatility-Based Risk beyond 15–20%, and then 25–30% would confirm a complete transition to an expansion phase.
The expansion has begun during a period of price decline, indicating a downside-driven volatility pattern. A reversal would be signaled by the volatility percentile climbing in conjunction with the price action and breakout of recent local highs, turning the trend from downside-led to upside-led expansion.