Cool – seems like proxy_set_header Connection "Upgrade"; was the bad option and caused it to break.
Thank you so much!
Based on your config: proxy_set_header Connection $connection_upgrade; I am getting:
2021/04/05 22:35:53 [emerg] 1#1: unknown "connection_upgrade" variable
nginx: [emerg] unknown "connection_upgrade" variable
This is an alpine based nginx container.