Positive Breakout in UUP US Dollar ETF Aug 11

Aug 11, 2010: 11:01 AM CST

I wanted to show a quick chart of the 60-min intraday structure of the US Dollar ETF – UUP – and highlight the multiple positive momentum divergences and the recent powerful breakout to the upside – which could signal a change in the short/intermediate term down-move in the Dollar Index.

Let’s take a look:

This is actually very similar to the daily chart of the fund going back to the end of 2009 ahead of the powerful upside breakout – and if the index is to reverse to the upside, it’s going to do so here.

Look closely at the 3/10 Momentum Oscillator and the series of higher lows in the oscillator when compared to a string of lower lows in price – that highlights growing bullish momentum in a similar method to a rubber band being stretched.

The further the stretch, the more violent/painful the snap-back.  It looks like we’re seeing that ‘painful’ upside resolution (to shorts) today come true.

Counting today, there have been three subsequent upside morning gaps – gaps can be seen as confirmation of an impulse (up-move) underway.

On the 60min chart, watch what happens at the $24.00 level right here – it’s the 200 period SMA and could hold resistance.  If not, look for a continuation and official trend reversal to the upside.

For a quick reference, here’s the Daily Chart with additional reference levels to watch:

Price nipped just slightly under the 61.8% Fibonacci retracement off the December 2009 low to the June 2010 peak – and price broke today above the 200 day SMA.  That could be a big development.

Price also broke above the falling 20 day EMA and looks set for a ‘collision course’ for the 50 EMA at $24.25.  Right now, price rests at the 50% Fibonacci retracement at $24.00.

So, a break beyond $24.00 and above $24.25 would be a confirming sign of a positive trend reversal on the intraday frames – keep that in mind and how that would play out in the cross-market currents.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

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