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16 December, 2011
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MA RK ET
EUR/USD GBP/USD USD/JPY USD/CHF
Ron William, CMT, MSTA
S-TERM
MULTI-DAY
L-TERM
MULTI-WEEK
OBJECTIVES/COMMENTS
STOP
1.2870 (Entered 12/12/2011) Await fresh signal. Awaiting New Buy Trade Setup Above 80.00. Possible sell higher. Awaiting New Buy Trade Setup.
1.3140
SHORT 2
1.0050
1.0050
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
EUR/USD EUR/USD
EUR/USD (Daily)
BERMUDA TRIANGLE
FAILED
BREAKOUTS
BREAKOUT ZONE
(1.4000)
Our cycle analysis successfully signalled increased volatility within the first two weeks of December across risk proxies, including the equity and commodity markets. Expect some respite ahead of the holiday period.
200-DMA (1.4060)
Watch for a sustained close beneath 1.3000 (psychological level) to resume EUR/USDs multi-month downtrend into 1.2870 (2011 major low).
UPTREND (2 YEARS)
Near-term resistance can be found at 1.3215 and potentially even 1.3550 (02 Dec high). 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).
11 MONTH HIGH
Speculative (net long) liquidity flows is strengthening once again and will continue to help resume the USDs major bull-run from its historic oversold extremes (momentum, sentiment and liquidity).
Special Report: EUR/USD A Fall From Grace ? Decline Targets 1.3770/1.3410.
VIDEO
MIG Bank Webinar: Why the US dollar is likely to gain up to 30% in 6-12 months.
BREAKOUT ZONE
13
S-T TREND
L-T TREND
STRATEGY
SHORT 1: 1.3280, Objs: 1.2870, Stop: 1.3280
Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 2
GBP/USD
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
POST INTERVENTION RETRACEMENT (PIR I) MULTI-YEAR PATTERN ANTICIPATES BREAKOUT (85-80)
QUAKE SHOCK!
G7 MOVE HIGH
Confirmation beneath 77.25 (pivot level) would help trigger a third price retracement back to pre-intervention levels (PIR III) and potentially even a new post world war record low beneath 75.35 (PINL).
PIR II
POST BOJ MOVE (III) HIGH
PIR III
Sentiment in the option markets continues to suggest that USD/JPY buying pressure remains overcrowded as everyone continues to try and be the first to call the market bottom, within the end of this multi-year contracting
pattern (see top chart insert). This may first inspire a temporary, but dramatic, price spike through 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, 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 points to trigger over the next few weeks, 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
S-T TREND
L-T TREND
STRATEGY
Awaiting Renewed Buy Trade Setup above 80.00.
Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 426 4
USD/CHF
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 to the USD/CHF daily chart, Bloomberg Finance LP 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 6.374% and 7.355%, before the agreement. (These yields were trading at 5.699% and 6.685% respectively at the same time yesterday.)
S-T TREND
L-T TREND
STRATEGY
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
USD/CAD (Daily) CONFIRMATION ABOVE 1.0680 OPENS LARGER RECOVERY
a resumption higher to open a buy trade setup. The bulls need to push back above 1.0425 and 1.0524 (25 Nov swing high), in order to trigger a breakout from the rates major triangle pattern. In terms of the big picture, a directional confirmation above 1.0680 is still needed to unlock the 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 (see top chart insert).
Only a sustained close beneath 1.0200 and 1.0080, then parity unlocks
DEMARK SIGNAL KEY RESISTANCE (1.0425)
bearish setbacks into the long-term 200-day MA at 0.9879 and 0.9726 (31 Aug low).
st
month 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.
th
S-T TREND
L-T TREND
STRATEGY
Awaiting New Buy Trade Setup above 1.0425.
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
200-DMA (1.0405)
Elsewhere, the Aussie has weakened sharply, as expected, against the New Zealand dollar. Near-term price activity is mean reverting back into the 200day MA and we watch for further setbacks over the multi-day/week horizon. The Aussie dollar is also pairing back its mild recovery against the Japanese yen, while holding above the neck-line of its two-year distribution pattern.
Watch for further downside scope into support at 72.00 which would signal further unwinding of global risk appetite.
S-T TREND
L-T TREND
STRATEGY
SHORT 2: 1.0050, Obj: 0.9660/0.9380, Stop: 1.0050.
Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 7
GBP/JPY
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 8
EUR/JPY
S-T TREND
L-T TREND
STRATEGY
Buy limit 3 at 101.05, Objs: 102.05/105.00/107.68, Stop: 100.05
Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 9
EUR/GBP
S-T TREND
L-T TREND
STRATEGY
Sell limit 3 at 0.8510, Objs: 0.8395/0.8300/0.8142, Stop: 0.8615
Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 10
EUR/CHF
Messy sideways trade continues.
EUR/CHF is currently witnessing a flurry of price activity which has now triggered 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. 1.2226 will be used as a filter. Under 1.2226, we swapped our previous 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 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 EUR/CHF daily chart, Bloomberg Finance LP 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 tiggered, could herald a return towards the 1.0075 level.
S-T TREND
L-T TREND
Bijoy Kar, Technical Strategist, E-mail: b.kar@migbank.com, Phone: +41 32 7228 424 11
GOLD
CYCLE FAVOURS DECLINE INTO $1300 & $1040-00
DEMARK SIGNAL WARNED OF GOLDS OVERBOUGHT CONDITIONS
DOUBLE TOP
$1800 $1760
TREND CHANNEL
(12 YEARS)
broken for the first time in 3 years. The move was triggered by a multi-month triangle pattern breakout (see both daily and intraday charts). Downside pressure remains heavy from inter-market weakness across related risk proxies such as EUR/USD and equity markets. Moreover, there
$1600
$1532
200-DMA BROKEN FIRST TIME IN 3 YEARS! CONFIRMATION BENEATH $1532 TARGETS $1300
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 lower into $1300 and perhaps even $1040-1000 (12-year channelfloor/see
top chart insert). 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.
PATTERN BREAKOUT
Please select links for in-depth Gold coverage: Special Report Golds mountainous peak at riskbeneath $1600 Bloomberg Countdown
SHARP DECLINE
VIDEO
WEAK RECOVERY
S-T TREND
L-T TREND
STRATEGY
SHORT 2: 1705, Obj: 1530, 1300, Stop: 1750
Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 12
SILVER
Gold/Silver "Mint" Ratio Silver (Daily)
DEMARK SELL SIGNALS
test of the previous swing low at $26.0700. Macro price structure continues to focus on the downside risks, following the major sell-off in September. Such a dramatic move traditionally produces volatile trading ranges. This allows the market to have enough time to recover and accumulate renewed buying interest.
KEY SUPPORT (26.0700)
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. Continue to watch the gold-silver mint ratio (see top chart insert) 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.
RANGE BREAKOUT
PSYCHOLOGICAL (30.0000)
WEAK RECOVERY
S-T TREND
L-T TREND
STRATEGY
SHORT 2: 34.1300, Obj: 26.0700/23.3400, Stop: 34.1300
Ron William, Technical Strategist, E-mail: r.william@migbank.com, Phone: +41 32 7228 454 13
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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
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