This is a long term monthly chart of the US Dollar. There was a bullish divergence back in the 1980's that preceded a long term strengthening dollar throughout the 90's. There's a bearish divergence that started in 2014 and is intact today. I don't like to put to much emphasis on inter-market analysis because it can cause paralysis by analysis. However, wouldn't this question the breakouts we see in banks? Would this confirm the breakout we're seeing in energy continuing from last year? If the dollar does weaken even with higher interest rates does that mean that inflation is here to stay? I have no idea. LOL. I'm no economist but I think this chart is interesting. Thoughts?
Comment:
Its been brough to my attention that my use of "bearish divergence" isn't text book accurate. My original point still stands none the less. The RSI is making lower lows and lower highs as the index makes higher lows and tests resistance on the highs. The last time we had real long term divergence of the RSI and the index was in the 1980's and you can see what happened afterwards. The dollar ripped higher. In any event if the DXY breaks overhead resistance and passes the former most recent high then of course the thesis is incorrect. I appreciate all the comments and views.
