Trading the EURUSD off the ATR stop on higher timeframe this morning after the Minimum Bid Rate Announcement at 7:45 AM New York time using the binary options was the least risky trade setup to take. The 180 minute chart had an ATR stop right above price. In the Futures and Binary Trading room, I explained to everyone that it is not the 7:45 am Minimum Bid Rate that creates the move. It is actually the press conference. (The Euro is the only currency that has the movement off the press conference and not the Bid Rate.) The average movement off this report is generally eighty pips but you have to wait for the Press Conference.
Trading the EURUSD Off the ATR Stop on the Higher Timeframe
After the Minimum Bid Rate, there was maybe a twenty pip move on both the EURUSD and EURJPY (we were trading both on the binary options side). With an expected volatility of eighty pips, this was the safer mechanism for taking trades. Right before the Press Conference we were able to enter the EURUSD with two trades, one for the 11am expiration and one for 3pm expiration (both New York times). I explained that I expected price to initially go up but it would hit resistance at the ATR and then fall hard — so the majority of the movement would be to the downside. Price actually came to within about fifteen pips of the ATR stop (plus sign on the chart below) and then massive selling appeared. Price actually fell about one hundred and fifty pips. We exited both binary positions with profits as price had made a wide bar down and wide bars typically retrace.
If you expand the chart, you will see the blue arrow highlights the wide bar formed after the Press Conference. Using the binary options for trading the EURUSD off the ATR stop from the 180 minute chart was a great choice because it was a high volatile report and we could cap our risk using an out of the money binary option. Of course, the trade did work out as we anticipated so we made profits.