Binary Options and Forex Analysis – Trade of the Week: GBP/JPY 27th April 2015

United Kingdom – CBI Industrial Order Expectations

GBP/JPY forex and binary options analysisAt GMT 10:00 a.m., the Confederation of British Industry released its industrial order expectations readings, which measures the level of a diffusion index by surveying 550 manufacturers in the country.

Binary options traders and other market participants consider the CBI industrial order expectations index reading to be a leading indicator of the UK’s economy. This is because manufacturing businesses quickly react to changing market situations and a sudden change in their expectations can signal future overall economic activity in the country, including, corporate spending, job creation, and capital investments.

In March, the CBI industrial order expectations index reading came out at 0, and the forecast for April was set at 4, indicating an increase in manufacturing order volume. However, the actual index reading came out at only 1, much lower compared to what the binary options traders were expecting.

Japan – Retail Sales

Later in the night, at GMT 10:40 p.m., the Japanese Ministry of Economy, Trade and Industry (METI) will release the national year-over-year retail sales figure, which measures the changes in the total value of sales made by the retail industry in the country.

Binary options traders consider the retail sales figure to be a leading indicator of the Japanese economy as it acts as one of the main gauge of consumer spending that makes up the majority of the overall economic activity in Japan.

Last month, the value of the Japanese retail sales (y/y) decreased by 1.7% and the forecast for this month is currently set at an additional decrease of 7.4%, indicating future weakness in the Japanese retail industry.

Trade Recommendation for the GBP/JPY

Chart GBPJPY, D1, 2015.04.27 10:42 UTC

The GBP/JPY has been trending downwards since February 26 and after reaching the psychological support level around 175.00, it started retracing. Subsequently, on April 17, the GBP/JPY broke above the downward sloping trend line created by the previous downtrend, and continued to move upwards.

Last week, the GBP/JPY reached as high as 181 and found temporary resistance around the 61.8% Fibonacci retracement level, which is situated at 181.15. Given that the UK’s CBI industrial order expectations index reading came out much worse than what the binary options market participants were expecting, the bullish momentum might come to a half for the time being. However, the Japanese retail sector has not perform well over the past month and if the retail sales (y/y) figure suggest any further decline than 7% tonight, it may help GBP/JPY bulls to push the price above the resistance level around 181.15 and turn it into a strong support level.

In that situation, it would be recommended that binary options traders consider placing a CALL order with the GBP/JPY once that daily bar closes above the 181.15 level.

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About our Forex and Binary Options Analyst:  Asif Imtiaz

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