USD US Dollar Index Monthly Chart Sideways Triangle Breakouts Overbot Negative Divergence

The US dollar index had a parabolic move in the back half of last year breaking out from the long-term 2008-2014 sideways triangle. The vertical sides of the large triangles are 15 to 18 handles so the breakout from 82 targets 97-100, which price achieves. The smaller triangle is 3 points on the vertical side so the 97 breakout targets one hundo. Keystone's 80/20 rule says 8's lead to 2's so 98 opens the door to 102 and a move above 80 actually opened the door to 120.

The red lines clearly show negative divergence across all indicators as price prints a new high. Thus, a long-term top is in play for the dollar going forward which is contrary to the Wall Street analysts consensus that expects a higher dollar. The red neggie d says the dollar is very tired, afterall, it ran from 80 to almost 100 over the last year.

The high last week was 99.47 so this 99.5-102.0 level should serve as a long term top. That nasty negative divergence has to be more respected above all else as well as overbot conditions. The most interesting concept to this analysis is that ECB President Draghi is expected to provide more QE on 12/3/15; he promised this three weeks ago which goosed global stock markets higher. More ECB QE sends the euro lower which in turn sends the USD higher since each currency basket holds about 40% of the other, so the XEU (euro) moves opposite the USD (US dollar).

The chart above says the dollar does not have much more gas going forward into and through 2016 and likely beyond. Why? If this is the case, when Draghi eases, will the move lower in the euro become muted? Everybody and his bro is starting to call for euro parity (1.00) again, now at 1.07-1.08, but perhaps parity takes on a new namesake called Godot and the euro will not fall as far as expected. Interesting times are ahead.

The central bankers have artificially goosed global stock markets higher for the last 6-1/2 years so you would have to give Draghi leeway in firing his money bazooka in early December. The Fed is supposed to raise the key rate on 12/16/15 which should also send the dollar higher. There is a disconnect occurring since the chart above says the dollar is pretty much topped out in this 97-102 area for the months, perhaps couple years, ahead. As this is typed another analyst proclaims that euro-collar parity is coming very fast.

On the XEU, euro, monthly chart, the mirror image of the chart above occurs (and the mirror image technical analysis) which would be expected. The euro is now matching the lows from earlier this year at 1.074-ish. The XEU may move down to the 104-105 area as the dollar hits 100-102 with the upcoming central banker shenanigans but euro parity may remain a very elusive goal in the months ahead. 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.

Note Added Tuesday Morning, 11/10/15, at 8:40 AM EST: The euro falls to a six-month low in the 1.0710-1.0740 range. The USD continues to tease 100 stumbling through the 99-100 level. The universal consensus is higher dollar and lower euro and euro parity (1.00) coming in the weeks ahead. The boat is fully loaded to one side. Outspoken and flamboyant strategist David Bloom says the euro will remain flat or rise since everything is baked into the cake a very controversial and out-on-the-limb call. Respected currency strategist Kit Juckes comments in line with the technical analysis above with slightly more weakness for euro and strength for dollar on tap but euro parity is far too early to call.

Note Added Tuesday Morning, 11/10/15, at 8:53 AM EST: CNBC television personality Jim Cramer says the dollar is headed higher. Cramer proclaims, "The dollar is going through the roof!"