Binary Options Analysis – Trade of the Week: NZD/JPY 14th April 2015

Japan – Core Machinery Orders

On Sunday, at GMT 11:50 p.m., the Japanese Cabinet Office released the month-over-month national core machinery orders, which measures the changes in the total value of new purchase orders placed by the private sector with the local Japanese manufacturers. However, this figure excludes shipping related machines and utilities.

Binary options traders consider the core machinery orders figure to be an important leading indicator of the Japanese productions as a rising trend of purchase orders provides indication that Japanese manufacturers are about to increase their economic activity in order to deliver the orders.

In March, the core machinery orders figure suggested that purchase orders decreased by 1.7% and the forecast for April were set at an additional decrease of 2.6%. However, the actual figure came out much better than what the market was expecting, at -0.4%.

New Zealand – New Zealand Institute of Economic Research (NZIER) Business Confidence

On Monday, at GMT 9:59 p.m., the New Zealand Institute of Economic Research (NZIER) released its business confidence index, which measures the level of a diffusion index by surveying 2,500 manufacturers, builders, wholesalers, retailers, and various service providers in the country.

The NZIER business confidence index is considered by binary options traders to be an important leading indicator of the economic health of New Zealand because of the large sample size of the survey. In addition, businesses are the first to react to changing market conditions and a drastic change in the sentiment of businesses can signal future economic growth and overall productivity in the country.

Last month, the NZIER business confidence index reading came out at 24 and this month the index reading came just shy of last month’s reading, at 23.

Trade Recommendation for the NZD/JPY

Chart NZDJPY, D1, 2015.04.13 23:39 UTC

From the first week of January until February 3, the NZD/JPY price fell by almost 1,000 points from 94.04 to 84.05. However, soon after reaching the low, the pair formed a bullish outside bar (BUOB) and started a recovery. For the last 10 weeks, the NZD/JPY price retraced back to 91.50 and formed an upward sloping trend line.

Today, the NZD/JPY price penetrated below this trend line and reached the historical pivot zone around 89.00. Given that the Japanese core machinery orders (m/m) figure came out much better than what the binary options market was expecting, it should add additional bearish pressure on the pair and push the price below the support around 89.00.

Under the circumstances, it is recommended that binary options traders consider placing a PUT order with the NZD/JPY once the price closes below the 89.00 level on the daily time frame, as it would turn this support into a strong resistance.

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About our Forex Analyst:  Asif Imtiaz

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