Thursday, October 7, 2010

Dollar At Support, Bounce Likely

Figure 1 is a weekly chart of the PowerShares DB US Dollar Bull ETF (symbol: UUP).

Figure 1. UUP/ weekly

The red and yellow dots are key pivot points or important areas of buying (support) and selling (resistance).  UUP is finding buying interest at the 22.42 to 22.51 support zone.  23.50 is resistance.  A weekly close below these support levels would suggest continuation of the down trend in the Dollar.  Such an occurrence would like put upward pressure on equities.  If UUP bounces - high likelihood - then equities will be seen as vulnerable.


PappaHippo said...

I just checked your chart against the US Dollar index (symbol DXY0) instead of UUP on There seems to be more downside in DXY0 when compared to the ETF, probably because the ETF includes some additional costs.

Guy M. Lerner said...

you are correct; from this perspective I try to use the actual instrument I am buying/ trading

Often times when doing backtesting or looking at charts there are discrepancies between the indices and the instrument traded