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This morning the UUP climbed above its red line interior channel taking the market back down again after a gap down and snap back rally early. However, in the afternoon the UUP ran up against the center line of its long term black line channel (center line shown in green) in lower left corner UUP (Dollar Index) chart. After trying three times to breach that line and failed the UUP rolled over in the last hour of trading triggering a fierce relieve rally / short squeeze into the bell. The VIX also rolled over substantially and dropped back down into the blue channel and also down into its interior black line channel.
Hopefully, this will allow for a decent up day tomorrow. It would have been better if today's trading had been a V pattern, trading down from the open & hitting the lows midday then climbing throughout the afternoon which would produce a hammer reversal candle across all the indexes. Instead all the indexes gapped down at the open, popped back up, sold off, then rallied to the high of the day at the closing bell.
Fortunately, the UUP's candle for today is a shooting star reversal candle at the centerline of the long term channel which is something the bulls really can get behind tomorrow. Although the SPY did slip through the 4-week uphill pink line channel this morning the NASDAQ did not.
In a few minutes I will post the updated long term charts.
Alan
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