The Nikkei 225 index contains 225 members, and on Thursday, 3 March 2016, 178 members were up and 41 members were down. The star performers of the day include companies like Sumitomo Mitsui financial group Inc (+8.55%), Mitsui OSK Lines Ltd (+8.44%), TDK Corporation (+7.66%) and Shinsei Bank Ltd (+7.14%). The weaker performers on the day included central Japan Railway Corporation (-2.13%), COMSYS Holdings Corporation (-2.59%), and Sumitomo Osaka Cement Co Ltd (-2.41%). The performance of members changes dramatically from day-to-day, but it is important to get a sense of how companies are doing as that gives us an indication of the volatility of their share prices. Wild swings in daily share prices indicate volatility with the stock, and if read correctly could prove a lucrative opportunity for binary options traders.

Reading the Nikkei 225 index in March

Overall, the short-term outlook for the Nikkei 225 index is somewhat negative with occasional sparks of upward momentum. The index has finally managed to break through a resistance level during a falling trend. This is positive in that it indicates a slowdown in the rate of decline for the index. We are likely to see horizontal movement (sideways movement) of the index in March as stabilization measures come into effect. There are various support levels at around 16,000, with resistance points hovering around 17,900. The relative strength index indicates that there is plenty of bullish momentum in the Nikkei 225 over the short-term and we are likely to see price rises during the month of March.

Owing to the lag effect, the RSI chart will taper off before the Nikkei 225 weakens. As can be seen from the below graphic which represents the short-term performance of the Nikkei 225, there is reason for optimism in February as a mini-bullish trend has developed, although the horizontal movement is clearly evident. The Nikkei 225 index has a pivot point of 14,952.61 and it has been 14 days (as at March 3, 2016) that the index has moved in the opposite direction. This is an important gauge of short-term trading direction as a binary options trader.

*For the purposes of this analysis, the short-term is defined a period with an investment perspective of 1 – 6 weeks.

The performance of the Nikkei 225 has been bullish of late, given these statistics (March 3, 2016):

• 22-day period à -5.07%
• 5-day period à +5.08%
• 1-day period à +1.28%

Important Economic Announcements for Japan in March

• Monday March 7, 2016 à GDP Growth Rate (Q4, 2015) consensus forecast is -1.4% and the previous figure was 1.3%
• Tuesday March 8, 2016 à Consumer Confidence for February, (previous figure was 42.5)
• Monday March 14, 2016 à Bank of Japan Interest Rate Decision (previous figure of -0.1%)
• Wednesday March 16, 2016 à Balance of Trade for February (previous figure of ¥645.9B)
• Friday, March 18, 2016 à Bank of Japan Monthly Report
• Thursday, March 24, 2016 à Inflation Rate Year on Year
• Monday, March 28, 2016 à Japan Unemployment Rate for February (previous figure of 3.2%)
• Thursday, March 31, 2016 à Tankan Large Manufacturing Index Q1

Gauging the Nikkei 225 Index in March

The Japanese economy started the year on a poor note, following weakness in China and emerging markets. The rout in Chinese equities in January led to sharp declines in commodity prices, notably iron ore, copper, steel and others. The Bank of Japan (BoJ) will retain its call rate at 0.07%, despite the general opinion of analysts that the rate would reach 0.85% by 2020. It should be pointed out that the JPY remains undervalued, despite the recent surge. It is however in an enviable position since it is a safe-haven currency. For the remainder of 2016, the JPY is expected to trade at a rate of 115 to the USD. Therefore for March, we can expect currency stability with the JPY, but it should be pointed out that the March Fed meeting may cause some flutters, despite the low likelihood of a Fed rate hike. It looks to be a stable short-term period for the Nikkei 225, with ‘bullish spikes’ at intermittent periods.