DAILY TECHNICAL REPORT

6 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

SHORT 2 34.1300 Sell Stop 3 1.2130 LONG 3 119.40 Sell limit 3 0.9610

Await fresh signal. Await fresh signal. Mild bias to longs. Await new buy trade setup above 80.00. 0.9500/0.9306/0.9176 Awaiting new buy trade setup. Await fresh signal. 120.50/121.50/122.00 Possibly looking to buy short-term. Await signal. Look to sell higher. 1.2010/1.1526/1.1002 Stopped for profit at 1605. Two objectives met. 26.0700/23.3400 (Entered 01/11/2011) 34.1300 1.2250 118.90 0.9700

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
Prints a succession of lower lows.

DAILY TECHNICAL REPORT

6 January, 2012

EUR/USD has registered a lower high at 1.3199 and a fresh low in trade today.

This has also broken under the major low in 2011 at 1.2860, reaching 1.2763 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).

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

EUR/USD daily chart, Bloomberg Finance LP

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

6 January, 2012

Hourly consolidation band remains intact for now.

GBP/USD continues to trade within the confines of a month long trading range between 1.5780 and 1.5362. A breakout is sought ahead of trade positioning. 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 GBP/USD daily chart, Bloomberg Finance LP large move that took place in 2008.

GBP/USD hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Await fresh signal. Mild bias to longs.

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

6 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, that we had been expecting, back 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

6 January, 2012

Strong resistance anticipated near 0.9550/0.9600.

Sell limit adjusted slightly to 0.9610. USD/CHF has broken over 0.9470, increasing the likelihood of a return to 0.9550 and then potentially 0.9600. However, the 0.9550/0.9600

region is expected to act as strong resistance. USD/CHF continues to be a tied to the fate of EUR/CHF and thus the ability of the SNB to successfully maintain its floor in EUR/CHF at 1.2000. We remain focused on the 1.2130 level in EUR/CHF, below which should increase the likelihood of selling towards the 1.2000 level. Fresh highs are still anticipated in 10 year Italian sovereign yields, with scope then for a minor pullback, maintaining downside pressure on USD/CHF daily chart, Bloomberg Finance LP USD/CHF. 10 year yields in Spain and Italy are currently trading at 5.691% and 7.137% versus 6.478% and 7.355%, before the US Dollar based swap agreement. In both case we can see that the effects of the swap This reminds us that the

agreement appear to be wearing off.

agreement was likely put in place due to a need for US Dollars by European financial institutions. This is a clear warning sign. These

same yields were trading at 5.531% and 6.991% respectively yesterday.

USD/CHF hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Sell limit 3 at 0.9610, Objs: 0.9500/0.9306/0.9176, Stop: 0.9700

www.migbank.com

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

USD/CAD

DAILY TECHNICAL REPORT

6 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 on to 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

6 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 1.0753 over coming sessions. 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

6 January, 2012

Scope still seen for a return to 122.00.

GBP/JPY has found initial support just ahead of 119.00. However, a higher low still needs to be registered to realise our favoured scenario of a return to the 122.00 region. We view the recent failure to remain under 119.38 as building the basis for a minor false break lower, which will also benefit our near-term scenario. Failure to hold over 119.00 will suggest a re-test of the region close to 116.84. Strong support is anticipated close to this level, should

weakness persist. This is in line with our longer-term view, where it is perceived that there is potential for a much larger recovery to develop with scope for a return GBP/JPY daily chart, Bloomberg Finance LP to 163.09 and then potentially on to 192.65. However, signs of basing are still not evident in the medium-term timeframe.

GBP/JPY hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Long 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

6 January, 2012

Break under 98.66 negates falling wedge scenario.

EUR/JPY has now broken under the recent hourly low at 98.66 negating the prior potential for a false break lower in the daily timeframe. This failure to recover to the 101.50 region instead targets 96.84, the mid December low from 2000. 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 In the absence of further stresses out of the core Euro-Zone it would be expected that a degree of support would be found close to current levels for a longer-term recovery. Thus event risk is high in relation to bond market movement, particularly in Italy.

EUR/JPY hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Possibly looking to buy short term.

www.migbank.com

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

EUR/GBP

DAILY TECHNICAL REPORT

6 January, 2012

Short-term pullback sought to enter short positions.

EUR/GBP has entered into a phase where it appears to be trading more fluidly without being subject to countless false breaks in either direction, which had become the hallmark of the pair over recent months. Medium-term we continue to seek a return towards 0.8068 and potentially lower. To facilitate better trade location a push higher is

sought ahead of trade formulation. The change in characteristics of EUR/GBP is partly attributed to the breakdown in EUR/USD under 1.3146, which has assisted short positioning in other EUR crosses too. EUR/GBP daily chart, Bloomberg Finance LP As with all EUR crosses we need to keep a close eye on the core EuroZone sovereign bond markets. Within this environment Sterling may well be judged as a short-term safe haven, further adding to the potential for downside pressure ahead. Focus remains on the Italian bond market where yields are once again trading over 7.000%, with a host of rollover auctions scheduled for the first half of the year.

EUR/GBP hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Missed sell at 0.8425. Look to sell higher.

www.migbank.com

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

EUR/CHF

DAILY TECHNICAL REPORT

6 January, 2012

Under 1.2133 to trigger an extension lower.

This strategy will be negated on a push back over the lower high at 1.2242. EUR/CHF is consolidating just above the key low at 1.2133. A return to and break under this level is anticipated, with scope then for a fresh attempt at 1.2000. If a break under 1.2000 were to occur, the 1.1800 level would then become the main focus. Our trading bias is also affected by the failure over the last three months to break over the 50 week moving average, warning that the longer-term down-trend is still dominant. This suggests that a return to weakness cannot be ruled out. EUR/CHF daily and weekly charts, Bloomberg Finance LP Italian 10 year yields are once again trading above 7.000% warning of a period of stress within the Italian sovereign market. Demand for Swiss Francs is likely to be linked to yields in core Euro-Zone nations. Given the longer-term structure, it is doubtful that 7.500% will cap this rate. In an environment where 10 year Italian yields are trading at, or near, 7.000% it is likely that the Swiss Franc will see a degree of demand despite the low deposit rates available.

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

6 January, 2012

Short-term recovery back towards the 200 day moving average.

Stopped for profit at 1605, having met two objectives. 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 stopped for profit at 1605. Initial two objectives met.

www.migbank.com

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

SILVER

DAILY TECHNICAL REPORT

6 January, 2012

Returns again towards the $30.0000 level.

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 26.1600 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

6 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.

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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

6 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