The euro got hammered by the us dollar during the last 4 days when it slipped sharply from 1.4940 last May 4 to a low of 1.4254 yesterday. However, it appears that the euro bulls will be looking to rebound from its recent losses shortly.
The EURUSD’s current price set-up is one of my favorites to execute. Like I said, the fiber fell to 1.4254 a couple of days after reaching a high of 1.4940 ( a slide of almost 900 pips!). However, if you look at its daily chart, the euro’s sell-off looks to be over extended already. Notice that the fiber’s fall was halted by its previous high at 1.4282. Moreover, the appearance of a hidden bullish divergence, where the price registers higher lows and the stochastics mark lower lows, suggest of a possible turnaround to back north.
Playing a hidden divergence set-up like this works well in my case since it is a continuation signal. As you know, the trend is your friend and riding one is relatively safer than catching a reversal. In this instance, the possibility of this trade panning out right for me gets higher because of the significant support at its previous high. So as for me, I would want to place a long order at EURUSD’s present level down to 1.4200, place my stop loss trigger below 1.4200 and my target price at around 1.4800.