The US Dollar is weakening this morning but it could simply be a retracement prior to the Friday morning Non-Farm Employment Change report, which is typically the biggest report of the month for the currencies.
In this video, Gail Mercer, founder of TradersHelpDesk, explains why she would focus on the EUR/USD and GBP/USD retracements. Basically, instead of just one technical analysis condition met, these currencies have two conditions met:
- Volume divergence on the lows
- Stochastics indicating oversold status
These conditions on the higher timeframe indicate that a retracement to the ATR is likely. The retracement on the EUR/USD will likely be an additional 44 ticks to the upside. The retracement on the GBP/USD will likely be an additional 88 ticks move to the upside. However, that doesn't indicate that you should just jump in. Instead it is better to wait for a test of the ATR on the lower timeframe (ie 60 minute or 15 minute timeframe). Once price retraces and forms an area that will support the additional movement to the upside, you can then utilize the low risk Out of the Money (OTM) binaries to enter the retracements. Then when price approaches the ATR on the 240-minute timeframe, if resistance forms, the next likely move will be to test the previous low on both the GBP/USD and the EUR/USD.
In other words, there are two potential trade setups that may play out on both of these currencies -- the retracement to the ATR, which may then form resistance, and then a retest of the low (since both are in a downtrend).