Chart of the Day - Tuesday, September 8th, 2020

Today’s Chart of the Day was shared on Twitter by Aaron Jackson (@ATMcharts). It's a daily candlestick chart of the US Dollar ETF, $UUP, over the past year.  Aaron points out that after five months of trending lower, the US Dollar is setting up for a potential mean reversion move higher. A bullish momentum divergence formed throughout August when price made a series of lower lows while RSI made a series of higher lows. Price is attempting to confirm that divergence by closing above the August highs. We'll be watching this development closely over the next few weeks. A counter-trend rally in the US Dollar would likely be a short-term headwind for several asset classes, including Large-cap multinational stocks, Commodities, and Emerging Markets. In a comment to The Chart Report, Aaron added, "Normally we’d want to use futures over ETFs when available, but sometimes the ETFs offer little hints like UUP’s March bottoming tail."