The US Dollar UUP ETF may be forming a small head and shoulders bottom formation that is almost near completion. At previous points in the chart one could have said the same thing but then the dollar just kept breaking down again and again.
The only thing different about this formation now is that the right side of the head formation was formed on all time record UUP volume and the weekly MACD appears close to an upside crossover.
If we do get a valid upside breakout in the UUP it could intensify a possible short covering rally and put some pressure on the broad market.
The SP500 today did not follow through as many expected on the downside and there exists the possibility that the bulls may make the bears sweat for a day or two going into the Fed decision on Wednesday. I continue to believe that any rallies to the upside in the next day or two will eventually resolve in heavier selling thereafter going into the end of the week.
It could be that the correction we are going through now will be more complex and laborious type correction instead of a quick spike down as initially thought. It is still too early to tell.
Today was also the first day of the creation of the November monthly price bar and it is not at all unusual to at least see a little upside price action play before creating the real meat of the November monthly price bar. It is quite rare to see a monthly price bar just open and then immediately go down without creating at least some upside price action. We still do have the nasty looking October monthly reversal bar which is signaling how November’s monthly bar will resolve in the weeks ahead.