DAILY TECHNICAL REPORT

21 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

ENTRY LEVEL

OBJECTIVES/COMMENTS

STOP

Sell limit 3 Sell Stop 3 SHORT 2 SHORT 2 0.8510 1.2130 1705 34.1300

Exited at 1.3140. Await fresh signal. Await New Buy Trade Setup Above 80.00. Looking to sell. Awaiting New Buy Trade Setup. Exited at 1.0050. Await fresh signal. Await new setup. 0.8395/0.8300/0.8142 1.2030/1.1526/1.1002 1530/1300 (Entered 12/12/2011) 26.0700/23.3400 (Entered 01/11/2011) 100.05 0.8615 1.2230 1705 34.1300

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

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

21 December, 2011

EUR/USD (Daily)

BERMUDA TRIANGLE

Short-covering around the key 1.3000 level.

FAILED
BREAKOUTS

EUR/USD is unwinding mildly from oversold conditions, driven by shortcovering as the market adjusts to a new bearish paradigm, following the break beneath that all-important psychological level at 1.3000.

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

200-DMA (1.4043)

1.3000 (PSYCHOLOGICAL) 1.2870 (2011 MAJOR LOW)

period. Watch for a sustained close beneath 1.3000 (psychological level) to resume EUR/USDs multi-month downtrend into 1.2870 (2011 major low). 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 11month highs, (a move worth over 10% from the summer 2010 lows). Speculative (net long) liquidity flows are 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.

UPTREND (2 YEARS)

EUR/USD daily chart, Bloomberg Finance LP

USD INDEX
EUR 57.6%, JPY 13.6%, GBP 11.9% CAD 9.1%, SEK 4.2%, CHF 3.6%

11 MONTH HIGH

VIDEO

BREAKOUT ZONE
200-DMA (75.95)

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

DEMARK BUY SIGNALS

13

KEY SUPPORT (73.50-73.00)

S-T TREND

L-T TREND

STRATEGY
Exited at 1.3140.

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

21 December, 2011

Short-term, long positioning favoured.

GBP/USD continues to move back towards the 1.5780/70 double top in the hourly timeframe after breaking over the resistance of the hourly falling channel that had been containing price since the beginning of the month. The movement of 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 still 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
Biased towards long positions in the very short-term.

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)

DAILY TECHNICAL REPORT

21 December, 2011

Weakening beneath 78.24 (DeMark Level).

USD/JPY is still weak beneath 78.24 (DeMark Level), as price continues to hold within a multi-day trading range (see hourly chart below). 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).

QUAKE SHOCK!
G7 MOVE HIGH

POST BOJ MOVE (II) HIGH POST BOJ MOVE (III) HIGH

PIR II

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).

DEMARK BUY SIGNAL AHEAD OF NEW POST WWII LOW (75.35)

USD/JPY daily chart, Bloomberg Finance LP

POST

USD/JPY (60 MIN)

BOJ
MOVE (III) DEMARK SELL SIGNAL

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.

KEY PIVOT LEVEL (77.25) TRIGGERS POST INTERVENTION RETRACEMENT

Please select the link below to review our special coverage on USD/JPY. Special Report: USDJPY Verging on a major 40 year cycle reversal VIDEO 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.

USD/JPY hourly 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

21 December, 2011

Breaks under hourly channel support.

USD/CHF has weakened ever since meeting resistance close to 0.9550. This initial bout of weakness may now mark the end of the rising phase from 0.8568. A return back towards the 200 day moving average is possible from current levels. We also note that in the hourly timeframe, a break under channel support has taken place, which if sustained may warn of further deterioration. The yield on Italian 10 year sovereign debt tested 7.000% again this week. A return to this level is anticipated ahead of a push to 7.500% before completion of the recent rising phase off 5.758%. This is likely to USD/CHF daily chart, Bloomberg Finance LP cause the Swiss Franc to be deemed as a safe haven once again, despite the low yield available on Franc deposits. 10 year yields in Spain and Italy are currently trading at 5.041% and 6.560% versus 6.478% and 7.355%, before the US Dollar swap based agreement. Thus Spanish debt is experiencing a stronger positive

effect, in contrast to the Italian market, which remains elevated. The funding needs of the Italian government will return in the early part of next year as large tranches of debt will need to be rolled over. These yields were trading at 5.107% and 6.641% yesterday.

USD/CHF hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Looking to sell.

www.migbank.com

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

USD/CAD
USD/CAD (Daily)

DAILY TECHNICAL REPORT

21 December, 2011

Unwinding from intraday resistance at 1.0425.

USD/CAD is unwinding sharply from intraday resistance at 1.0425, which coincided with a short-term DeMark exhaustion signal.

CONFIRMATION ABOVE 1.0680 OPENS LARGER RECOVERY

The move is accelerating lower within an intraday consolidation pattern (see lower chart) and we prefer to wait for a strong directional confirmation higher before initiating a buy trade setup.

DEMARK BUY SIGNAL

200-DMA (0.9886)

Until then, keep a watchful eye on support 1.0220. A break here would trigger further downside into 1.0000.

Meanwhile, the bulls need to push back above 1.0425 and 1.0524 (25 Nov swing high), in order to trigger a larger breakout from the rates multimonth triangle pattern.

USD/CAD daily chart, Bloomberg Finance LP

USD/CAD (60 MIN)
DEMARK SELL SIGNAL

DEMARK SIGNAL KEY RESISTANCE (1.0425)

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).

BULL CHANNEL

EUR/CAD is retesting the base of an important multi-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
th

KEY SUPPORT (1.0250)

correlation pressure onto EUR/USD.

S-T TREND

L-T TREND

STRATEGY
Awaiting New Buy Trade Setup above 1.0425.

USD/CAD hourly 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

21 December, 2011

Strong unwinding from oversold conditions.

200-DMA (1.0405)

AUD/USD is unwinding strongly from oversold conditions, which also coincided with an intraday DeMark buy signal (see lower chart). Although this recovery sharp, it is likely to be short-lived as signaled by the DeMark signal. The bears must sustain below 1.0000 to further compound downside pressure on the rates multi-year uptrend and push back towards 0.9611.

AUD/USD
(Weekly) 38.2% STRUCTURAL LEVEL

(0.9144)
50%

3 YEAR UPTREND UNDER PRESSURE

KEY ZONE

Elsewhere, the Aussie continues to weaken sharply, against the New Zealand dollar. Near-term price activity is mean reverting back into the 200-day MA and we watch for further setbacks over the multi-day/week horizon.

(0.8546)
61.8%

(0.7947)

The Aussie dollar is also pairing back its mild recovery against the Japanese yen, while holding above the neck-line of its two-year

AUD/USD daily chart, Bloomberg Finance LP

distribution pattern. Watch for further downside scope into support at 72.00 which would signal further unwinding of global risk appetite.

AUD/USD (60 MIN)

DEMARK BUY SIGNAL RANGE BREAKOUT

S-T TREND

L-T TREND

STRATEGY
Exited at 1.0050.

AUD/USD hourly 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

21 December, 2011

Sustained over 122.23 suggests a fresh recovery leg higher.

GBP/JPY has broken over the resistance of a falling hourly channel. Coupled with this we have seen a push over the 122.23 lower high. If this rise can be sustained then a fresh leg higher will be favoured to form for a swing all the way back to 127.32. A break back over 122.98 will add to a more medium-term bullish stance. A failure to do so will suggest that the recovery seen from the 116.84 low is corrective in nature. This suggests scope for a return to 119.38 and then potentially 116.84. We do however note that for the majority of December a 120.33 122.64 range has been traded. A break out of this range is sought GBP/JPY daily chart, Bloomberg Finance LP ahead of strategy formulation.

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

21 December, 2011

Breaks higher from extreme range bound conditions.

EUR/JPY has met short-term support close to the key long-term low at 100.76, reaching 101.05 so far, on a mid-market basis. Although a short-term recovery has followed, a larger swing higher is required to ensure that we are not in the midst of a corrective phase higher. 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 and thus, while trade is maintained above 101.05, a further leg higher is favoured. EUR/JPY daily chart, Bloomberg Finance LP We await a sustained resolution of the range trading conditions before formulating fresh strategy. Sustained under 100.76 will warn of a much larger continuation to the downside.

S-T TREND

L-T TREND

STRATEGY
Await fresh signal.

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
Approaches daily channel support.

DAILY TECHNICAL REPORT

21 December, 2011

EUR/GBP remains weak in both the short and long-term timeframes. We note that price is now approaching the support of the daily channel that has contained the pair for the last 5/6 months. This potential

support level lies near 0.8320 and constitutes a near-term target. However, we await a re-test of the old trend-line support as resistance ahead of possible short positioning. Short positioning in EUR/GBP may not experience as many false breaks going forward, due to the clear break under 1.3146 that has been witnessed in EUR/USD in recent trade. EUR/GBP daily chart, Bloomberg Finance LP As detailed in other parts of this report, rising yields in the core EuroZone sovereign bond markets is a continued concern and one that may destabilise the FX markets going forward. Within this environment Sterling may well be judged the best of a bad bunch and to a degree be seen as a short-term 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

DAILY TECHNICAL REPORT

21 December, 2011

Downside bias remains, while within a larger range.

EUR/CHF has broken under our filter level at 1.2226 leading to us changing our sell strategy to a sell stop, as detailed below. We also note that the 50 week moving average has managed to contain the market on the upside, warning that the larger down-trend may not be over. The Italian 10 year sovereign yield continues to meet resistance close to the 7.000% level. A break over this level will place funding stresses on the Italian economy and may lead to the Swiss Franc being sought once again as a safe haven. As mentioned in prior reports, the low yield available on Swiss Franc deposits is unlikely to act as an impediment to it being sought as a safe haven. EUR/CHF daily and weekly charts, Bloomberg Finance LP 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 stop 3 at 1.2130, Objs: 1.2030/1.1526/1.1002, Stop: 1.2230.

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

DAILY TECHNICAL REPORT

21 December, 2011

DOUBLE TOP

Gold re-testing its 200-day average

Gold is temporarily re-testing its 200-day average, which was recently 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

$1800 $1760
TREND CHANNEL
(12 YEARS)

$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

GOLD KEY LEVELS

DOWNSIDE: $1600 / $1530 / $1300 UPSIDE: $1670/ $1760 / $1800

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.

Gold daily and weekly charts, Bloomberg Finance LP

GOLD (60 MIN)

PATTERN BREAKOUT

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

VIDEO

Bloomberg Countdown

CNBC Squawk Box

MIG Bank Gold Webinar video

(BLOOMBERG & CNBC REPORTS)

S-T TREND

L-T TREND

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

Gold intraday chart, 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
Gold/Silver "Mint" Ratio Silver (Daily)
DEMARK SELL SIGNALS

DAILY TECHNICAL REPORT

21 December, 2011

Weak bounce retesting $30.0000.

Silvers weak recovery from oversold conditions is retesting key support at $30.0000. Only a sustained close below here would trigger a test of the

13 YEAR LEVEL UNWINDING 70% FROM OVERSOLD TERRITORY

200 DMA (36.7345)

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 long-term uptrend and help offer a potential buying opportunity for

Spot Silver daily chart with Silver/Gold ratio, Bloomberg Finance LP

SILVER (60 MIN)

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

WEAK RECOVERY

S-T TREND

L-T TREND

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

Spot Silver hourly charts, 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

21 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.

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Material Interests
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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

CONTACT

DAILY TECHNICAL REPORT

21 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