One concept that is explained in Tom Williams’ book, Master The Markets, is bullish and bearish volume. As defined in the book, bullish volume is increasing volume on up-moves and decreasing volume on down-moves. Bearish volume is the opposite.

If you find a stock where the volume is acting bullish/bearish, you can get a basic idea that the professionals are buying/selling.

Figuring out if the volume is bullish or bearish is only one piece of the puzzle — we must also examine the price moves associated with the volume to really get a full picture of what the professionals are doing with the stock.

I’ve been watching UUP for a while now. It has bounced off a major level of support and has been acting very bullish ever since.

Here is a chart with some trend-lines drawn:

First, the yellow line shows the massive increase in volume over the last several months. This is partially due to the increase in popularity of the ProShares ETFs, but from a technical standpoint, it also shows a major increase in professional activity (mainly buying) at the major level of support.

Next, the neon blue lines show the previous trend channel that UUP bounced within since June.

Lastly, the green line at the end of the blue lines shows the breakout of UUP on the super-high volume.

While it may be incredibly hard to know why the dollar would be gaining strength, it doesn’t matter. All we can do is analyze what we see the market do and react to profit from it.