DAILY TECHNICAL REPORT

15 December, 2011
Please note: None of the strategies below represent trading advice or trading recommendations of any kind. Please refer to our full disclaimer.

MA RK ET
EUR/USD GBP/USD USD/JPY USD/CHF
Ron William, CMT, MSTA

S-TERM
MULTI-DAY

L-TERM
MULTI-WEEK

STRATEGY/ POSITION SHORT 1

ENTRY LEVEL 1.3280

OBJECTIVES/COMMENTS

STOP

1.2870 (Entered 12/12/2011) Await fresh signal. Await new buy trade setup above 80.00. Buy strategy removed. Possibly sell higher. Awaiting new buy trade setup.

1.3280

USD/CAD AUD/USD GBP/JPY EUR/JPY EUR/GBP

SHORT 3

1.0050

0.9950/0.9660/0.9380 (Entered 13/12/2011) Await fresh signal.

1.0210

Buy limit 3 Sell limit 3 Sell limit 3 SHORT 2 SHORT 2

101.05 0.8510 1.2480 1705 34.1300

102.05/105.00/107.68 0.8395/0.8300/0.8142 1.2380/1.2226/1.1973 1530/1300 (Entered 12/12/2011) 26.0700/23.3400 (Entered 01/11/2011)

100.05 0.8615 1.2580 1705 34.1300

Bijoy Kar, CFA

EUR/CHF GOLD SILVER

WINNER BEST SPECIALIST RESEARCH

DISCLAIMER & DISCLOSURES

Please read the disclaimer and the disclosures which can be found at the end of this report

Notes: Entries are in 3 units and objectives are at 3 separate levels where 1 unit will be exited. When the first objective (PT 1) has been hit the stop will be moved to the entry point for a near risk-free trade. When the second objective (PT 2) has been hit the stop will be moved to PT 1 locking in more profit. All orders are valid until the next report is published, or a trading strategy alert is sent between reports. CH-2008 Neuchtel info@migbank.com Switzerland www.migbank.com

MIG BANK / Forex Broker Tel +41 32 722 81 00

14, rte des Gouttes dOr Fax +41 32 722 81 01

EUR/USD EUR/USD

DAILY TECHNICAL REPORT

15 December, 2011

EUR/USD (Daily)

BERMUDA TRIANGLE

FAILED
BREAKOUTS

EUR/USD breaks 1.3000 (Psychological level).

Second objective met, while still maintaining a risk-free trade. EUR/USD bears have continued to push lower and have now broken beneath that all-important psychological level at 1.3000.

BREAKOUT ZONE

(1.4000)

Our cycle analysis has successfully signalled increased volatility within the first two weeks of December across risk proxies, including the equity and commodity markets.

200-DMA (1.4060)

1.3000 (PSYCHOLOGICAL) 1.2870 (2011 MAJOR LOW)

The recent close beneath 1.3146 re-establishes the larger downtrend from April. Watch for a sustained close beneath 1.3000 (psychological level) to target 1.2870 (2011 major low). Meanwhile, resistance can be found at 1.3550 (02 Dec high), then 1.3610

EUR/USD daily chart, Bloomberg Finance LP

USD INDEX
200-DMA (75.88)
EUR 57.6%, JPY 13.6%, GBP 11.9% CAD 9.1%, SEK 4.2%, CHF 3.6%

and 1.3730. Any rebound into these levels is likely to be short-lived. Inversely, the USD Index has extended its recovery higher to new 11-month highs, (a move worth over 10% from the summer 2010 lows). Speculative (net long) liquidity flows is strengthening once again and will continue to help resume the USDs major bull-run from its historic oversold
+10%

USD INDEX (4 YEARS)

11 MONTH HIGH

+27%

+19%

SO FAR

extremes (momentum, sentiment and liquidity).

Special Report: EUR/USD A Fall From Grace ? Decline Targets 1.3770/1.3410.

VIDEO

BREAKOUT ZONE
DEMARK BUY SIGNAL

MIG Bank Webinar: Why the US dollar is likely to gain up to 30% in 6-12 months. US Dollar Interview on Bloomberg

13
DEMARK BUY SIGNALS

KEY SUPPORT (73.50-73.00)

TRIGGER (15000)
COT LIQUIDITY
EXTREME NET US $ SHORT POSITIONS

S-T TREND

L-T TREND

STRATEGY
SHORT 1: 1.3280, Objs: 1.2870, Stop: 1.3280

USD Index daily chart, Bloomberg Finance LP

www.migbank.com

Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 2

GBP/USD

DAILY TECHNICAL REPORT

15 December, 2011

Break over trend-line off 1.5770 sought before attempting longs.

GBP/USD has managed to break out of its prior sequence of lower lows and higher highs, forming an hourly falling channel. This may mark the final phase of short-term weakness from the 1.5780 lower high. However, a break over the hourly channel resistance is sought before attempting longs. Demand for sterling is likely to be affected by the movement in selected core Euro-Zone sovereign markets. In particular we note that Italian 10 year yields are trading close to 7.00%. Daily structure is also suggestive of a return to test 7.00% and higher. A continuation of higher yields may see Sterling being adopted as a safe haven again. This reasoning would likely help to keep cable within its year long range. GBP/USD daily chart, Bloomberg Finance LP Failure to remain above 1.5423 will see an immediate target at 1.5272 and then potentially trend-line support at 1.5110.

GBP/USD hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Await fresh signal.

www.migbank.com

Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 3

USD/JPY
USD/JPY POST INTERVENTION RETRACEMENT (PIR I)

DAILY TECHNICAL REPORT

15 December, 2011

Weakening beneath 78.24 (DeMark Level).

USD/JPY is still weak beneath 78.24 (DeMark Level). There is an ever growing probability of unfolding a third price retracement back to pre-

QUAKE SHOCK! 83.30

POST G7 MOVE (I) HIGH

intervention levels (PIR III) and potentially even a new post world war record low beneath 75.35 (PINL). Sentiment in the option markets continues to suggest that USD/JPY buying pressure remains overcrowded as everyone continues to try and be the first
82.00

to call the market bottom. This may inspire a temporary, but dramatic, price spike through

POST BOJ MOVE (II) HIGH

psychological levels at 75.00 and perhaps even sub-74.00. Such a move would help flush out a number of downside barriers and stop-loss orders,
80.24

which would create healthy price vacuum for a potential major reversal. The medium/long-term view remains bullish, as USD/JPY verges toward a major long-term 40-year cycle upside reversal. Expect key cycle inflection

USD/JPY Weekly ENDING (2007 2011) DIAGONAL

PIR II

POST BOJ MOVE (III) HIGH

PATTERN ANTICIPATES BREAKOUT (85-79)

PIR III

points to trigger into December this year, offering a sustained move above our upside trigger level at 80.00/60, then 82.00 and 83.30.

Please select the link below to review our special coverage on USD/JPY. Special Report: USDJPY Verging on a major 40 year cycle reversal Webinar: USD/JPYs Long-Term Structural Change Media Reports: CNBC / Squawk Box & Bloomberg
MONTHLY DEMARK BUY SIGNAL DEMARK BUY SIGNAL AHEAD OF NEW POST WWII LOW (75.35)

S-T TREND

L-T TREND

STRATEGY
Awaiting renewed buy trade setup above 80.00.

USD/JPY daily, weekly chart, Bloomberg Finance LP

www.migbank.com

Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 426 4

USD/CHF

DAILY TECHNICAL REPORT

15 December, 2011

Encounters resistance close to our first target at 0.9555.

Long strategy to buy at 0.9410 removed. Look to sell higher. USD/CHF has met resistance close to our initial target in our long strategy to buy at 0.9410. We are thus removing this strategy as this may complete the rise from 0.9176. We view the push under 0.9430 as potentially

breaking down the short-term bullish structure. However, while above 0.9342, there remains scope for a further rise back towards 0.9548 initially. Given that the region of the initial target has been tested and with yields continuing to rise in some core Euro-Zone sovereign markets, the trade location is deemed as poor. It is anticipated that a return to 7.000% in Italian 10 year yields is imminent. This may once again pressure USD/CHF USD/CHF daily chart, Bloomberg Finance LP to the downside. There is thus potentially a greater opportunity to sell at higher levels. Referencing Spanish and Italian government bonds back to their respective levels prior to the six party central bank agreement, we note that most of the positive after effects have worn off, with yields trading at 5.698% and 6.824% versus 6.478% and 7.355%, before the agreement. (These yields were trading at 5.699% and 6.685% respectively at the same time yesterday.)

USD/CHF hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Buy strategy removed. Possibly looking to sell higher.

www.migbank.com

Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 5

USD/CAD

DAILY TECHNICAL REPORT

15 December, 2011

USD/CAD (Daily)

USD/CAD (Weekly)

Bulls extend rebound above 1.0200.

USD/CAD is maintaining its sharp bullish rebound above 1.0200. We are watching for further sustained price activity to open a buy trade setup. A directional confirmation above 1.0680 is still needed to unlock the
CONFIRMATION ABOVE 1.0680 OPENS LARGER RECOVERY

recovery into 1.0850 plus. This would extend the upside breakout from the rates ending triangle pattern, which was part of a major Elliott wave cycle. Only a sustained close beneath 1.0080 and parity unlocks bearish setbacks into the long-term 200-day MA at 0.9870 and 0.9726 (31 Aug low).
st

200-DMA (0.9876)

DEMARK BUY SIGNAL

EUR/CAD is unwinding mildly ahead of the base of an important multimonth distribution pattern. A break beneath 1.3393-79 (19 Sept low/61.8% Fib), signals an important breakdown into 1.3140 and would provide substantial correlation pressure onto EUR/USD. CHF/CAD, which serves as a proxy for risk appetite, remains weak beneath its 200-day MA (which had provided support for most of the uptrend since mid-2010). Key support now holds at 1.0893 (61.8% Fib retrace). A break here would extend the sharp decline into 1.0332 (01 March low) and
st th

USD/CAD daily chart, Bloomberg Finance LP

MAJOR RESISTANCE

CHF/CAD (Daily)
REVERSAL PATTERN

50%

200-DMA (1.3876)

help confirm further unwinding of global risk appetite.

50%

(1.3570)
61.8%

(1.3379)

(1.1488)
61.8%

(1.0893)

EUR/CAD (Daily)

S-T TREND

L-T TREND

STRATEGY
Awaiting new buy trade setup.

EUR/CAD & CHF/CAD chart, Bloomberg Finance LP

www.migbank.com

Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 6

AUD/USD
AUD/USD
(1 YEAR)
DEMARK SELL SIGNALS

DAILY TECHNICAL REPORT

15 December, 2011

AUD/USD
(Weekly)

Sharp setbacks have broken through parity.

First objective met, while maintaining a risk-free trade. AUD/USD has resumed its sharp setbacks beneath its 200-day MA which is
STRUCTURAL LEVEL

currently holding at 1.0412. This key level is likely to encourage further downside scope over the multi-day-week horizon.
3 YEAR UPTREND IS UNDER PRESSURE

38.2%

(0.9144)
50%

The bears must sustain below 1.0000 to further compound downside pressure on the rates multi-year uptrend and push back towards 0.9611. Elsewhere, the Aussie dollar remains strong against the New Zealand dollar. However, near-term price activity is mean reverting back into the 200day MA. Expect a sharp setback to ensue over the multi-day/week horizon. The Aussie dollar pairing back its mild recovery against the Japanese yen, while holding above the neck-line of its two-year distribution pattern. Watch

(0.8546)
200-DMA (1.0405) 61.8%

(0.7947) KEY ZONE

AUD/USD daily chart, Bloomberg Finance LP

AUD/NZD (Daily) AUD/JPY (Daily)
DEMARK SELL SIGNAL

for further downside scope into support at 72.00 which would signal further
13

unwinding of global risk appetite.

REVERSING INTO 200-DMA 38.2%

(76.70)
50%

200DMA (82.37)

(72.58)
61.8%

(68.47)

RESUMPTION OF BREAKDOWN ADDS TO RISK AVERSION

KEY SUPPORT 1.2319 / 1.2100

S-T TREND

L-T TREND

STRATEGY
SHORT 2: 1.0050, Obj: 0.9660/0.9380, Stop: 1.0050.

AUD/NZD & AUD/JPY daily chart, Bloomberg Finance LP

www.migbank.com

Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 7

GBP/JPY

DAILY TECHNICAL REPORT

15 December, 2011

Channels lower in a possible corrective structure.

GBP/JPY has been largely contained within a falling hourly channel for the majority of December. This structure is seen as being part of a corrective phase with an eventual return to strength anticipated, potentially close to the 120.00 region. However, the recovery seen from the 116.84 low appears corrective in nature, suggesting scope for a return to 119.38 and then potentially 116.84. A minor break has taken place under the support of the hourly channel, reaching 120.30. This may now mark a short-term higher low for a fresh swing to the upside targeting both 122.64 and 122.23, before a potential lower high in the medium-term timeframe may develop. This would then GBP/JPY daily chart, Bloomberg Finance LP return focus back to the structure mentioned in the second bullet point.

GBP/JPY hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Sell strategy removed. Await fresh signal.

www.migbank.com

Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 8

EUR/JPY

DAILY TECHNICAL REPORT

15 December, 2011

Support anticipated close to 100.76.

EUR/JPY saw an extension lower in recent trade following the break under 1.3146 in EUR/USD, particularly in light of the recent static nature of USD/JPY. We now anticipate a degree of support close to the 100.76 level, from where a recovery may take place As mentioned in prior reports, the medium-term recovery that we have already witnessed from 100.76 to 111.60 is viewed as the initial leg higher in a larger recovery structure. Even if a lower low were to be printed in the medium-term timeframe, an initial recovery from the 100.76 region is anticipated. With this in mind we EUR/JPY daily chart, Bloomberg Finance LP look to attempt longs just ahead of the key 100.76 level. Sustained under this level will warn of a much larger continuation to the downside.

S-T TREND

L-T TREND

STRATEGY
Buy limit 3 at 101.05, Objs: 102.05/105.00/107.68, Stop: 100.05

EUR/JPY hourly chart, Bloomberg Finance LP

www.migbank.com

Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 9

EUR/GBP

DAILY TECHNICAL REPORT

15 December, 2011

Retrace back towards old trend-line support sought.

EUR/GBP continues to witness short-term weakness. Although a move to test daily falling channel support near 0.8330 may develop, we prefer to wait for higher levels to sell. We await a re-test of the old trend-line support as resistance ahead of possible short positioning. Also noted is that 1.3146 has now been broken in EUR/USD, weakening the longer-term outlook there. This may assist a short EUR/GBP bias going forward. An initial target for the current downswing in the daily timeframe is on the support of the previously mentioned falling channel, currently at 0.8330. As mentioned in prior reports, the recent six party central bank coordination EUR/GBP daily chart, Bloomberg Finance LP is in fact a warning sign and a clear weakness, suggesting scope for a credit contractionary phase. We continue to expect a continuation of rising yields in the Euro-Zone and it is within this environment that we see the potential for Sterling to be perceived as a safe haven.

S-T TREND

L-T TREND

STRATEGY
Sell limit 3 at 0.8510, Objs: 0.8395/0.8300/0.8142, Stop: 0.8615

EUR/GBP hourly chart, Bloomberg Finance LP

www.migbank.com

Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 10

EUR/CHF
Messy sideways trade continues.

DAILY TECHNICAL REPORT

15 December, 2011

EUR/CHF is currently witnessing a flurry of price activity and is approaching our filter level at 1.2226 (see below). It thus appears that the possibility of a break over the recent high at 1.2474 is receding. However, we will maintain our sell limit strategy at 1.2480 for now, as this represents a decent trade location during thin Christmas markets. However, we look to see if a break under 1.2226 can be achieved. 1.2226 will be used as a filter. Under 1.2226, we will swap our current sell limit strategy to a sell stop strategy at 1.2130, with objectives at 1.2030/1.1526/1.1002 and a stop at 1.2230. We reference the Italian 10 year sovereign yield on a daily basis in our EUR/CHF weekly chart, Bloomberg Finance LP USD/CHF commentary. A return to 7.000% and higher is building a recipe for disaster and, should it take place, may well instigate a period in which the Swiss Franc is sought as a safe haven irrespective of little to no yield pick-up. A parallel can be made with the negative yield that was available on short dated US paper during the last crisis. Sometimes return of capital is more important then return on capital. The 1.2000 level is the only level that the SNB has suggested they will defend. There is thus likely to be a large cluster of stops under this level, which if triggered, could herald a return towards the 1.0075 level.

S-T TREND

L-T TREND

EUR/CHF hourly chart, Bloomberg Finance LP

www.migbank.com

Sell limit 3 at 1.2480, Objs: 1.2380/1.2226/1.1973, Stop: 1.2580.

Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 11

GOLD
GOLD KEY LEVELS
DOWNSIDE: $1600 / $1530 UPSIDE: $1760 /$1800

DAILY TECHNICAL REPORT

15 December, 2011

RISK ZONE III

DOUBLE TOP

Gold breaks its 200-day average for first time in 3 years!

First objective met, while still maintaining a risk-free trade. Golds has broken through its 200-day average for the first time in 3 years, after extending its slide from a multi-month triangle pattern breakout. Downside pressure is also accelerating from inter-market weakness across related risk proxies such as EUR/USD and equity markets.

DEMARK SIGNAL WARNED OF GOLDS OVERBOUGHT CONDITIONS

$1800 $1760

20% SO FAR

$1600
200-DMA BROKEN FIRST TIME IN 3 YEARS!

34%

Moreover, there is still heightened risk for a much larger decline if we confirm a weekly close beneath $1600 and $1530 (swing low). A number of bargain hunting trend-followers will be watching this benchmark line in the sand for repeat support or a potential big squeeze

$1532

26%
CONFIRMATION BELOW $1530 UNLOCKS LARGER DECLINE INTO $1300 & $1040-1000 TREND CHANNEL
(12 YEARS)

lower into $1300 and perhaps even $1040-1000 (12-year channelfloor). Speculative (net long) flows also support this view having recently breached a key downside level which may threaten over 2 years of sizeable long gold positions. This will trigger a temporary, but dramatic setback that would ultimately offer a unique buying opportunity into summer 2012.

COT NET LONG SPECULATOR POSITIONS

Please select links for in-depth Gold coverage: Special Report Golds mountainous peak at riskbeneath $1600

VIDEO

Bloomberg Countdown

CNBC Squawk Box

MIG Bank Gold Webinar video

25%
OVER 2 YEARS OF SIZEABLE LONG GOLD POSITIONS UNDER THREAT IF KEY LEVEL BREAKS

(BLOOMBERG & CNBC REPORTS)

II

S-T TREND

L-T TREND

STRATEGY
SHORT 2: 1705, Obj: 1530, 1300, Stop: 1750

Gold weekly and daily charts, with COT Liquidity, Bloomberg Finance LP
www.migbank.com

Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 12

SILVER
Silver HITS 1980 Spike High! DEMARK SELL SIGNAL DEMARK SELL SIGNALS

DAILY TECHNICAL REPORT

15 December, 2011

Key support broken at $30.0000.

13

Silver (Daily)

First objective met, while still maintaining a risk-free trade. Silver has broken through its key support at 30.0000. Only a sustained close below here would trigger a test of the previous swing low at 26.0700. Macro price structure continues to focus on the downside risks, following the

200 DMA (36.8254)

II

major sell-off in September. Such a dramatic move traditionally produces volatile trading ranges. This allows the market to have enough time to

KEY SUPPORT (26.0700)

recover and accumulate renewed buying interest.

38.2%

(32.3135)

Expect a large trading range to hold between $37.0000-26.0700 over the multi-week/month horizon, with downside macro risk into $21.5165 (61.8% Fib-1999 bull market) and $20.0000. This would still maintain silvers longterm uptrend and help offer a potential buying opportunity for the eventual resumption higher.

Gold/Silver "Mint" Ratio

50%

(26.9150)

61.8%

(21.5165) 13 YEAR LEVEL

UNWINDING 70% FROM OVERSOLD TERRITORY

Continue to watch the gold-silver mint ratio which has now accelerated higher by 70%, suggesting further risk aversion over the next few weeks. This also helps explain recent divergences between gold and silver.

OVER

30 YEAR BASE PATTERN

BULL MARKET FROM 1999

Silver Monthly (since 1980)

S-T TREND

L-T TREND

STRATEGY
SHORT 2: 34.1300, Obj: 26.0700/23.3400, Stop: 34.1300

Spot Silver daily & weekly charts, with Gold/Silver ratio, Bloomberg Finance LP
www.migbank.com

Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 13

LEGAL TERMS

DAILY TECHNICAL REPORT

15 December, 2011

DISCLAIMER
No information published constitutes a solicitation or offer, or recommendation, or advice, to buy or sell any investment instrument, to effect any transactions, or to conclude any legal act of any kind whatsoever. The information published and opinions expressed are provided by MIG BANK for personal use and for informational purposes only and are subject to change without notice. MIG BANK makes no representations (either expressed or implied) that the information and opinions expressed are accurate, complete or up to date. In particular, nothing contained constitutes financial, legal, tax or other advice, nor should any investment or any other decisions be made solely based on the content. You should obtain advice from a qualified expert before making any investment decision. All opinion is based upon sources that MIG BANK believes to be reliable but they have no guarantees that this is the case. Therefore, whilst every effort is made to ensure that the content is accurate and complete, MIG BANK makes no such claim.

Limitation of liability
MIG BANK disclaims, without limitation, all liability for any loss or damage of any kind, including any direct, indirect or consequential damages.

Material Interests
MIG BANK and/or its board of directors, executive management and employees may have or have had interests or positions on, relevant securities.

Copyright
All material produced is copyright to MIG BANK and may not be copied, e-mailed, faxed or distributed without the express permission of MIG BANK.

Notes: Entries are in 3 units and objectives are at 3 separate levels where 1 unit will be exited. When the first objective (PT 1) has been hit the stop will be moved to the entry point for a near risk-free trade. When the second objective (PT 2) has been hit the stop will be moved to PT 1 locking in more profit. All orders are valid until the next report is published, or a trading strategy alert is sent between reports.

www.migbank.com

14

CONTACT

DAILY TECHNICAL REPORT

15 December, 2011

Howard Friend www.migbank.com Chief Market Strategist h.friend@migbank.com

Ron William Technical Strategist r.william@migbank.com

Bjioy Kar Technical Strategist b.kar@migbank.com

MIG BANK info@migbank.com www.migbank.com

14, rte des Gouttes dOr CH-2008 Neuchtel Tel.+41 32 722 81 00 15