Websocket handshake failing

[nightcrawler]

I'm trying to enable websocket communication between client and server and
have nginx as proxy. Ive applied the following congiguration changes to
websocket sites-enabled conf to allow for websocket proxy:
       proxy_set_header Upgrade $http_upgrade;
       proxy_set_header Connection "upgrade";
       proxy_set_header X-Forwarded-For   $http_x_forwarded_for;
       proxy_set_header Host              $http_host;
       proxy_pass http://mywebsite;

Although the server receives the Connection: Upgrade header and responds
with aConnection: Upgrade header as expected, the client gets only
Connection: keep-alive and I see the following error on js-console 

WebSocket connection to 'wss://mywebsite.dev/cometd/' failed: Error during
WebSocket handshake: 'Connection' header value must contain 'Upgrade'

I feel that nginx might not be proxying the response correctly either due to
incorrect response or bad config. 

Can someone help me out with debugging this? A lot of places where I see
this issue, usually the proxy does not support the websocket handshake which
causes the handshake to fail. 

Appreciate the help!

Posted at Nginx Forum: http://forum.nginx.org/read.php?2,260651,260651#msg-260651