The daily chart details how the euro rallied from the 2012 lows, at 1.203, through to the highs last month at 1.3711. Following the breach of this strong trend, red line, the currency has slipped down to the retracement lines calculated over this move, red lines.
The price action has just posted some near term lows, what is interesting however is how the RSI has not posted comparable lower low, black lines. This Failure Swing/positive divergence may indicate that the euro is able to post a rally from these near term lows. The more cautious would look to see the 1.3074 area cleared first, on such a move the outlook would improve, as the price action would remain above the 200 period moving average.
This positive divergence would be negated if price posts a fresh lower low. As a result we can see traders placing long stops just under the near term lows at 1.2956. And can see buyers at current levels on the solid risk/reward offered.
The more medium term picture would deteriorate if the 50% retracement level is breached which currently is coinciding with the 200 period moving average, orange line.