The Buck Stops Here – Right on Long Term Support

By | August 28, 2016

There is a long term zone of support on the weekly chart of the PowerShares DB US Dollar Bullish ETF (UUP) between $24.45 and $24.15, and the fund touched the upper end of the zone this week, which is the 38% retracement level of the 2014 and 2015 range, then bounced higher and finished the session near its high. The market may have some conviction that the trajectory of interest rates at this point is higher, but that may not be because the economy is improving or because of the implied correlation between currency and interest rates. No outcome seems binary in our current economic condition.

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The weekly candle strength is attributable to Friday’s positive price action following remarks out of the Jackson Hole meeting. A large bullish hammer-like candle formed with the open at the upper end of the support zone and the high just below the 50 day moving average. The stochastic oscillator has made a bullish crossover and has moved out of an oversold condition, the MacD is attempting a bullish crossover, and Chaikin money flow has jumped into positive territory after a spike in overall volume.

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