source: ProRealTime.com
Here is a chart of UUP (black), an ETF tracking the US Dollar. Click to enlarge.
The indicator plotted in blue is an average of the monthly and bi-monthly rate of change (comcept inspired from Will Rahal's blog). Note that this indicator reached a level (green horizontal line) that corresponded to turning points in the past, thus suggesting a possible up move for UUP.
The average ROC reaching this level would hardly mean much by itself but there are 2 other developments that indicate a turning point for the US Dollar:
1. The most powerfull one is the shift in sentiment towards unfavoring the dollar. Here is some evidence. Also I have noticed that articles favoring other currencies (like Euro and Yen) have become very frequent recently.
2. Some downside in the stock market would be favorable for the dollar given the recent correlation. As stated in the previous post I am expecting a correction.
Consequently, I think UUP will bounce from the zone delimited by the two horizontal segments on the chart. 23.9 looks like a good entry level. This is a short term play (a few days).
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