Since around October 11, the UUP has carved out a rounded type of bottom formation (inversely correlated with the rounded top formation exhibited by the spy ), which we notice is pushing up against key near-term resistance at 21.90/93.

If the resistance is hurdled and sustained, the UUP should continue higher towards 22.20 next. A sustained climb above 22.20 will argue strongly that the 10/14 low ended a correction with a larger bull move, and that a new up leg has started that will extend the Aug-Oct advance.

ETFs to watch are PowerShares DB US Dollar Index Bullish (UUP), and SPDR S&P 500 (SPY).

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.