DAILY TECHNICAL REPORT

3 January, 2012
Please note: None of the strategies below represent trading advice or trading recommendations of any kind. Please refer to our full disclaimer.

MA
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 1 SHORT 2 0.8425 1.2130 1705 34.1300 Buy limit 3 119.40

Await fresh signal. Await fresh signal. Await new buy trade setup above 80.00. Looking to sell. Awaiting new buy trade setup. Await fresh signal. 120.50/121.50/122.00 Await fresh signal. 0.8325/0.8142/0.8050 1.2010/1.1526/1.1002 1300 (Entered 12/12/2011) 26.0700/23.3400 (Entered 01/11/2011) 0.8525 1.2250 1605 34.1300 118.90

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

3 January, 2012

Recovers short-term after probing under 1.2946.

EUR/USD has registered a lower high at 1.3199 and is currently recovering after probing under 1.2946. Our cycle analysis successfully signalled increased volatility within the first two weeks of December across risk proxies, including the equity and commodity markets. We have also seen a re-test of the major low in 2011 at 1.2860, reaching 1.2858 thus far. Inversely, the USD Index has extended its recovery higher to 80.85 so far (a move worth over 10% from the summer 2010 lows). EUR/USD daily chart, Bloomberg Finance LP 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.

VIDEO

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

USD Index daily chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Await fresh signal.

www.migbank.com

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

GBP/USD

DAILY TECHNICAL REPORT

3 January, 2012

Remains mired in an hourly consolidation band.

GBP/USD continues to trade in a tight hourly range between 1.5780 and 1.5362. Sterling is still perceived as a relative safe haven given the continued elevated yields seen in the Italian sovereign bond market. With this in mind, should the region near long-term trend-line support be tested, currently at 1.5135, a degree of demand would be anticipated. For now a rise towards the 200 day moving average is possible, maintaining the old range from last year. Further strengthening of the USD may not be as aggressively witnessed in GBP/USD, given the large move that took place in 2008. GBP/USD daily chart, Bloomberg Finance LP

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
Bears break from multi-day range.

DAILY TECHNICAL REPORT

3 January, 2012

USD/JPY has weakened sharply beneath 78.24 (DeMark Level), as price broke from a multi-day trading range (see hourly chart below). Confirmation beneath 77.25 (pivot level) now helps trigger a third price retracement back that we had been expecting to pre-intervention levels and potentially even a new post world war record low beneath 75.35.

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.

USD/JPY daily chart, Bloomberg Finance LP

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 VIDEO Webinar: USD/JPYs Long-Term Structural Change Media Reports: CNBC / Squawk Box & Bloomberg

USD/JPY hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Awaiting renewed buy trade setup above 80.00.

www.migbank.com

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

USD/CHF

DAILY TECHNICAL REPORT

3 January, 2012

Further phase lower anticipated to break under 0.9244.

USD/CHF appears to be within the midst of a corrective phase in the hourly timeframe, with 0.9470 potentially being a lower high for a fresh push back down to 0.9244 and lower. Should an earlier break over 0.9470 take place then the 0.9550 region is expected to act as strong resistance once again. Focus remains on movements in EUR/CHF over coming days. EUR/CHF is now nearing our trigger level at 1.2130. This has the

potential to kick start the SNB and may lead to a spike higher in USD/CHF if they were to react to further strengthening of the Swiss Franc. USD/CHF daily chart, Bloomberg Finance LP Fresh highs are still anticipated in 10 year Italian sovereign yields, with scope then for a minor pullback in yields, maintaining downside pressure on USD/CHF. 10 year yields in Spain and Italy are currently trading at 5.140% and 6.846% versus 6.478% and 7.355%, before the US Dollar based swap agreement. These yields were trading at 5.217% and 7.092%

respectively on 29 December.

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

DAILY TECHNICAL REPORT

3 January, 2012

Unwinding from resistance at 1.0425.

USD/CAD is unwinding sharply from intraday resistance at 1.0425, which coincided with a short-term DeMark exhaustion signal. We prefer to wait for a strong directional confirmation higher before initiating a buy trade setup. A sustained break under 1.0220 now suggests 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 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. EUR/CAD has breached the base of an important multi-month distribution pattern. Sustained beneath 1.3393-79 (19
th

Sept low/61.8% Fib), now

signals an important breakdown. and provides substantial correlation pressure onto EUR/USD.

USD/CAD hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Awaiting new buy trade setup above 1.0425.

www.migbank.com

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

AUD/USD

DAILY TECHNICAL REPORT

3 January, 2012

Breaks higher out of triangular consolidation.

AUD/USD has seen a clear break higher out of the triangular consolidation that we highlighted last week. This now opens up a return to 1.0380 immediately and then 1.0753. Elsewhere, the Aussie has weakened against the New Zealand dollar. Near-term price activity has mean reverted back over the 200-day 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.

AUD/USD daily chart, Bloomberg Finance LP

AUD/USD hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Await fresh signal.

www.migbank.com

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

GBP/JPY

DAILY TECHNICAL REPORT

3 January, 2012

Short-term recovery anticipated towards 122.00.

GBP/JPY has tested under 119.38, reaching 119.00 thus far. The

failure to remain below 119.38 now warns of a short-term recovery phase back towards 122.00, ahead of a possible return to weakness. Medium-term a re-test of 116.84 is feasible, however, it is anticipated that strong support will be seen if a return to this level can be realised. This is in line with our longer-term view, where it is anticipated that a much larger recovery will develop with scope for a return to 163.09 and then potentially on to 192.65. However, signs of basing are still not evident in the longer-term timeframe. GBP/JPY daily chart, Bloomberg Finance LP There is scope here for the Sterling element of this pair to offer some strength in the event that Euro-Zone related stresses lead to further Yen cross weakness.

GBP/JPY hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Buy limit 3 at 119.40, Objs: 120.50/121.50/122.00, Stop 118.90.

www.migbank.com

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

EUR/JPY

DAILY TECHNICAL REPORT

3 January, 2012

Short-term respite possible, back towards 102.54.

EUR/JPY has seen a sharp break under 100.76 meeting 98.66 thus far. In doing so an exhaustion pattern appears to have formed in the hourly timeframe suggesting scope for a further swing to the upside. Initial sights are set on 101.00 with scope then for 102.54. The fate of this pair is still tightly bound to the movement in EUR/USD, particularly given the rangebound nature of USD/JPY over recent weeks and months. As with any pair that includes the EUR, we will continue to monitor Italian yields, anticipating a test of the 7.5% level in the 10 year maturity. EUR/JPY daily chart, Bloomberg Finance LP Failure to recover to the 101.50 region will instead target 96.84, the mid December low from 2000.

EUR/JPY 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 9

EUR/GBP

DAILY TECHNICAL REPORT

3 January, 2012

Return to 0.8422 possible while above 0.8303.

A break under 0.8303 will negate the strategy given below. EUR/GBP has tested the region close to our short entry price. While above 0.8303 in the hourly timeframe a return to this region remains possible and is expected. An earlier break under 0.8303 will initially target 0.8142 and then 0.8068/50. Shorts in EUR related crosses may be easier to maintain without being subject to false breaks in either direction, now that EUR/USD has broken clearly under the key 1.3146 level. EUR/GBP daily chart, Bloomberg Finance LP Rising yields in the core Euro-Zone sovereign bond markets is a continued concern and one that may impact the FX markets going forward. Within this environment Sterling may well be judged as a shortterm safe haven, further adding to the potential for downside pressure ahead. Focus remains on the Italian bond market where the results of auctions throughout the first half of the year will be watched closely.

EUR/GBP hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Sell limit 3 at 0.8425, Objs: 0.8325/0.8142/0.8050, Stop: 0.8525

www.migbank.com

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

EUR/CHF

DAILY TECHNICAL REPORT

3 January, 2012

Tests close to trigger level at 1.2130.

This strategy will be negated on a push back over the lower high at 1.2242. EUR/CHF tested the region close to our trigger level at 1.2130, reaching 1.2133 thus far. A return to this level is still anticipated while under 1.2242 in the hourly timeframe. If a break under 1.2130 can be

sustained a test of the 1.2000 level is anticipated and then on to 1.1800. The failure to hold above the 50 week moving average towards the end of last year also warns of a return to the larger down-trend. scenario will clearly be assisted by a break under 1.2000. EUR/CHF daily and weekly charts, Bloomberg Finance LP The Italian 10 year sovereign yield remains elevated, trading close to 7.000%. Focus now turns to rollover funding issues, coupled with a likely bout of negative growth in Italy, an unhealthy combination. The Swiss Franc is still deemed to have the capacity to be sought as a safe haven despite the low yield available on France deposits. This

EUR/CHF hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

www.migbank.com

Sell stop 3 at 1.2130, Objs: 1.2010/1.1526/1.1002, Stop: 1.2250.

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

GOLD

DAILY TECHNICAL REPORT

3 January, 2012

Gold weakens after testing its 200-day average as resistance.

Second objective met. Stop moved to 1605. Gold has re-tested 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). 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 lower into $1300 and perhaps even $1040-1000 (12-year channelfloor/see top chart insert). Gold daily and weekly charts, Bloomberg Finance LP 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.

Please select links for in-depth Gold coverage: Special Report Golds mountainous peak at riskbeneath $1600 Bloomberg Countdown CNBC Squawk Box
(BLOOMBERG & CNBC REPORTS)

VIDEO

MIG Bank Gold Webinar video

Gold hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
SHORT 1: 1705, Obj: 1300, Stop: 1605

www.migbank.com

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

SILVER
Weak bounce retested $30.0000.

DAILY TECHNICAL REPORT

3 January, 2012

Silvers weak recovery from oversold conditions has tested key support turned resistance at $30.0000. A sustained close below here now triggers a test of the previous swing low at $26.0700, reaching 26.1000 so far.

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.

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

Spot Silver daily chart, Bloomberg Finance LP

silvers long-term 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.

Spot Silver hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

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

www.migbank.com

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

LEGAL TERMS

DAILY TECHNICAL REPORT

3 January, 2012

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
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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

3 January, 2012

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