The 50-day Disparity Index
shows a hidden divergence on the EURUSD
that has formed over the past 2 months. It's easy to say that the euro's bearish trend
is strengthening ever since the high made at $1.103 on Monday, but it's important to highlight the fact that the presence of such a bearish
divergence will likely lead to a break of March's lows ($1.046) with possible continued selling pressure all the way down to parity (this is almost every sellers target it seems like, so why not). Divergences provide momentum setups to profit from strengthening of trends, and in such a case it's recommended to hold short positions for as long as possible.