I wanted to show a quick chart of the 60-min intraday structure of the US Dollar ETF  (NYSE: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.

Written By Corey Rosenbloom, CMT From Afraid To Trade  

My name is Corey Rosenbloom, CMT (Chartered Market Technician) trader, educator, analyst, and I am excited to share with you my experiences studying and trading the markets and to hear from you regarding your experiences, challenges, and frustrations, and successes. My goal is to create a community dedicated to reaching out to those who have been burned by the market or are anxious about risking their money to make money in the stock, options, or futures markets. Together, we can share strategies and learn how to overcome crippling fears that keep us from achieving our highest potential.

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