Elliott Wave Theory And A Volume Spike Prove Bullish For The US Dollar ETF (UUP, UDN)

dollar-sign“Let’s take a quick look at the (UUP)  Bullish Dollar ETF which could be on the verge of a low-risk, major turning point to the upside.  Let’s pay close attention to a recent volume surge and a likely Elliott Wave fractal count which seems to be complete. First, let’s start with the simple analysis. We’ve had a large down-move throughout most of 2009 as price peaked in March 2009 as the US Stock Market bottomed – there is currently a strong inverse relationship between the US Dollar Index and the S&P 500,”  Afraid To Trade Reports From IstockAnalyst.

“Volume surged at two locations – the June lows of $23.50 and most recently, the August lows just above $23.00.  Volume surges at the end of lengthy down-moves can be a sign either of ‘capitulation’ where the longs sell their shares in frustration all together, or more likely, it could be new buyers who perceive value at these levels and are rushing in to ’scoop up’ shares aggressively… or it could be a combination of both.  So, volume could be pointing to a bullish event ahead,” IstockAnalyst Reports.

“Second, there is a triple-swing positive momentum divergence (we call this the “Three Push Reversal” pattern) which – of course – has bullish implications (there was a very clear “three push” pattern on the S&P 500 going into the March lows).As price made three new absolute price lows, the 3/10 Oscillator made higher lows with price, creating the divergence situation.  Finally, price appears to be completing a 5-wave Elliott Wave fractal pattern (complete with sub-waves labeled appropriately) into the 5-wave lows,” IstockAnalyst  Reports.

Here is a look at what the US Dollar ETF (UUP) has done in the past year:

Chart for PowerShares DB US Dollar Index Bullish (UUP)

Here is a look at what the Bearish US Dollar ETF (UDN) has done in the past year:

Chart for PowerShares DB US Dollar Index Bearish (UDN)

Full Story: HERE


Leave a Reply

Your email address will not be published. Required fields are marked *