USD US Dollar Daily Chart Falling Wedge Oversold Positive Divergence Potential Head and Shoulders (H&S) Pattern

To no surprise, the dollar is the inverse of the euro so its chart is the mirror image of everything discussed for the euro ($XEU). Euro down = dollar up = commodites down = equities down, or, euro up = dollar down = commodities up = equities up.  If referencing this chart at a later date, review the euro chart as well by simply typing 'XEU' into the search box. The dollar chart above shows a developing H&S pattern with price currently testing the neck line at 81-ish. The head at 84, neck at 81, would lead to 78 should the neck line fail.  The dollar will likely move sideways thru the 80.5-84.0 range for the coming days, weeks and months.

The green falling wedge, oversold stochastics and positive divergence (green lines) are looking for a sharp launch move higher for the dollar from here.  The pesky MACD line remains bearish, however, so a small stutter step may occur before the dollar launches. Overall, on the longer term basis, an inverted H&S is in play expecting far higher prices for the dollar in the monthly time frame. Perhaps disinflation and deflation will appear in concert with a rising dollar.  But, the near term is a different animal. Draghi holds all the power and in less than one hour the story will be told, the euro and dollar should react violently.  The dollar chart says up is the direction, which means weaker euro, commodities, and equities. This flies in the face of the futures currently, that are up nine spoo's, and the basic idea that the imminent ECB announcement should support the stronger euro, commodities and equities markets. Interestingly, the exact top in the dollar on 7/26/12 is the day that Draghhi said he would do 'whatever it takes'. Today we find out if he will. The dollar chart says up in the near term, what does Draghi say?  This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.