DAILY TECHNICAL REPORT

13 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 3

ENTRY LEVEL 1.3280

OBJECTIVES/COMMENTS

STOP

1.3140/1.2990/1.2870 (Entered 12/12/2012) Await fresh signal. Await New Buy Trade Setup above 80.00.

1.3460

Buy limit 3

0.9335

0.9460/0.9630/0.9776 Awaiting New Buy Trade setup.

0.9250

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

Sell Stop 3 Sell limit 3

1.0050 123.00

0.9950/0.9660/0.9380 122.00/121.00/120.00 Await fresh signal. Sell at 0.8700 removed. Look to sell higher.

1.0210 124.00

Bijoy Kar, CFA

EUR/CHF GOLD SILVER

WINNER BEST SPECIALIST RESEARCH

Sell limit 3 SHORT 3 SHORT 3

1.2480 1705 34.1300

1.2380/1.2226/1.1973 1605/1530/1300 (Entered 12/12/2012) 29.9700/26.0700/23.3400 (Entered 01/11/2011)

1.2580 1750 34.1300

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

13 December, 2011

EUR/USD (Daily)

BERMUDA TRIANGLE

FAILED
BREAKOUTS

Bears push into 1.3146 after rating warning from Moodys.

EUR/USD bears have continued to push lower, after a recent warning from Moodys which cited that it would review ratings for all European Union countries. In price terms, bears need to break near-term support at 1.3146

BREAKOUT ZONE

(1.4000)

(Oct swing low). We have opened short position favouring extended downside scope. Our

200-DMA (1.4074)

cycle analysis suggests increased volatility over the next two weeks across 1.3000 (PSYCHOLOGICAL) 1.2870 (2011 MAJOR LOW) risk proxies, including the equity and commodity markets. A close beneath 1.3146 will re-establish the larger downtrend from April and

UPTREND (2 YEARS)

target 1.3000 (psychological level), then 1.2870 (2011 major low). Meanwhile, resistance can be found at 1.3550 (02 Dec high), then 1.3610

EUR/USD weekly chart, Bloomberg Finance LP

USD INDEX
200-DMA (75.84)
9 MONTH HIGH
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 is maintaining its recovery higher and still targets its recent 9-month highs near 80, (a move worth almost 10%). Speculative (net long) liquidity flows have unwound from recent spike highs (3 standard deviations from the yearly average). This will likely remain
+27% +19%
+10%
SO FAR

USD INDEX (4 YEARS)

strong and help resume the USDs major bull-run from its historic oversold extremes (momentum, sentiment and liquidity).

BREAKOUT ZONE
DEMARK BUY SIGNAL

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

US Dollar Interview on Bloomberg

13
DEMARK BUY SIGNALS

KEY SUPPORT (73.50-73.00)

S-T TREND

L-T TREND

STRATEGY
SHORT 3: 1.3280, Obj: 1.3140/1.2990/1.2870, Stop: 1.3460

USD Index daily chart and COT Liquidity, 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

13 December, 2011

Range formed by a sequence of false breaks.

GBP/USD has formed a sequence of false breaks on the hourly chart. We now await to see if the most recent push lower, to 1.5538, will see any follow through. This sequence of lower lows and higher highs has formed a range bound market for the majority of December. 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 With the above in mind, the region near 1.5400 may offer attractive levels to enter into medium-term long positions. Taking this approach will need to see levels closer to 1.5400 for a well placed stop. The range bound trade of the last few days is best avoided.

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

13 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 preintervention levels (PIR III) and potentially even a new post world war record

QUAKE SHOCK! 83.30

POST G7 MOVE (I) HIGH

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 to call the market bottom.
82.00

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

USD/JPY Weekly ENDING (2007 2011) DIAGONAL

PIR II

POST BOJ MOVE (III) HIGH

major long-term 40-year cycle upside reversal. Expect key cycle inflection
PIR III

PATTERN ANTICIPATES BREAKOUT (85-79)

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

Bloomberg

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

13 December, 2011

Over 0.9331 opens up a return to 0.9776.

USD/CHF saw a break over 0.9331 yesterday. This warns of a larger swing higher, back towards 0.9776. We now look to see if the region just above 0.9331 has the capacity to act as support for a further extension higher. This pair is currently ignoring the early warning signs exhibited by the continued rise in some core Euro-Zone government bond markets. If the yield on 10 year Italian government bonds continues to rise towards 7.000% and higher, there is scope for a degree of downside pressure to return to USD/CHF. favoured. Referencing Spanish and Italian government bonds back to their respective USD/CHF daily chart, Bloomberg Finance LP 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 5.881% and 6.684% versus 6.478% and 7.355%, before the agreement. (These yields were trading at 5.897% and 6.521% respectively at the same time yesterday.) In the meantime, the above mentioned extension higher is

USD/CHF hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Buy limit 3 at 0.9335, Objs: 0.9460/0.9630/0.9776, Stop: 0.9250

www.migbank.com

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

USD/CAD
USD/CAD (Daily) USD/CAD (Weekly)

DAILY TECHNICAL REPORT

13 December, 2011

Bulls 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.
CONFIRMATION ABOVE 1.0680 OPENS LARGER RECOVERY

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. 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 (0.9870)

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%
th

USD/CAD daily, weekly charts, Bloomberg Finance LP

MAJOR RESISTANCE

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
st

CHF/CAD (Daily)
REVERSAL PATTERN

50%

200-DMA (1.3876)

break here would extend the sharp decline into 1.0332 (01 March low) and help confirm further unwinding of global risk appetite.
50%

(1.3570)
61.8%

(1.3379)

(1.1488)
61.8%

(1.0893)

S-T TREND

L-T TREND

STRATEGY
Awaiting New Buy Trade Setup.

EUR/CAD and CHF/CAD daily charts, 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

13 December, 2011

AUD/USD
(Weekly)

Sharp setbacks beneath 200-day MA at 1.0414.

AUD/USD has resumed its sharp setbacks beneath its 200-day MA which is currently holding at 1.0414. This key level is likely to encourage further
STRUCTURAL LEVEL

downside scope over the multi-day-week horizon. The bears must sustain below 1.0000 to further compound downside
3 YEAR UPTREND IS UNDER PRESSURE

38.2%

(0.9144)
50%

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

(0.8546)
200-DMA (1.0405) 61.8%

(0.7947) KEY ZONE

AUD/USD daily, weekly charts, Bloomberg Finance LP

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

13

unwinding of global risk appetite.

REVERSING INTO 200-DMA 38.2%

(76.70)
50%

200DMA (82.47)

(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
Sell stop 3: 1.0050, Obj: 0.9950/0.9660/0.9380, Stop: 1.0210.

AUD/NZD and AUD/JPY daily charts, 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

13 December, 2011

Fails to maintain break lower in the hourly timeframe.

GBP/JPY continues to trade in a similar manner to GBP/USD. Yesterdays downside test of the month long range failed, returning to trade within the range. However, the rise seen since 116.84 is deemed corrective in nature suggesting scope for a return to 119.38 and then 116.84 in the near-term, before a more lasting recovery. As noted in prior reports, should this pair reach the 123.00 level, a degree of resistance would be anticipated. In the meantime, we remain wary of the short-term range bound environment but are re-instating the sell strategy at 123.00. If the recent range bound trade is resolved to the downside, then the 120.00 GBP/JPY daily chart, Bloomberg Finance LP level should provide a degree of support, from where a short-term leg higher would be favoured to develop.

GBP/JPY hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Sell limit 3 at 123.00, Objs: 122.00/121.00/120.00, Stop: 124.00

www.migbank.com

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

EUR/JPY

DAILY TECHNICAL REPORT

13 December, 2011

Trend channel contains hourly weakness.

EUR/JPY is likely to see a period of volatile trade due to its clear association with EUR/USD which is now approaching the key 1.3146 level. We are also wary of the possibility of coordinated intervention to maintain the stability of the Euro as a currency. This acts as a manipulation of the market, making technical analytics harder. The clash in structure that we have noted in previous reports remains present, with the recent rise from 102.49 being deemed as corrective. However, the larger 100.76 111.60 rise is suggestive of a further leg higher back towards 111.60. Thus the directional clash in two timeframes is ever present. EUR/JPY daily chart, Bloomberg Finance LP As mentioned above, if EUR/USD breaks under 1.3146 this will end the rising phase seen since 2010 and would likely be associated with a fall back down to 100.76 in EUR/JPY and potentially lower. It is preferred to see if a sustained break can be achieved under 1.3146 in EUR/USD, before committing to any directional bias.

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

DAILY TECHNICAL REPORT

13 December, 2011

Possible exhaustion pattern after break of trend-line support.

Sell strategy at 0.8700 removed. Negative bias remains. EUR/GBP broke under 0.8486 yesterday. In doing so, a break under longterm trend-line support from 0.8068 has been achieved. However, we note that in the hourly and 5 minute timeframes, there are initial signs of exhaustion. It is anticipated that these patterns may lead to a repeat

behaviour of this currency pair to exhibit a false break lower. Thus, although we have removed the prior sell strategy, we still await a recovery higher before participating in this market. The message that we take away from the recent six party central bank coordination is that there is a demand for US Dollars amongst European EUR/GBP daily chart, Bloomberg Finance LP banks. This fact is 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. Another trigger for participation in this possible break lower would be a lasting break under 1.3146 in EUR/USD, as this would likely have a knock on effect in all EUR crosses. We also note the continued trade under the 50 week and 200 day moving averages.

S-T TREND

L-T TREND

STRATEGY
Sell at 0.8700 removed. Look to sell higher.

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

13 December, 2011

Continues to trade within a tight range.

EUR/CHF saw an initial push higher above the 50 week moving average which again failed close to 1.2500, adding a further lower high to the sequence seen since the middle of October. Since reaching the 50 week moving average earlier in the year, it has acted as a decent region of resistance, warning that the larger down-trend may not be over. 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. EUR/CHF weekly chart, Bloomberg Finance LP A rising sovereign yield environment may now be returning within the EuroZone, as discussed in other parts of this report. We look to see if Italian 10 year sovereign yields can return to the 7.000% handle. It is these kinds of pressures that may assist a return to and break of 1.2123/31. This

represents the real goal of a lasting breakdown in the recent range bound structure. 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 to 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

13 December, 2011

RISK ZONE III

DOUBLE TOP

Bearish breakout from triangle pattern targets $1600.

Golds bearish breakout from a multi-month triangle pattern targets initial support at $1600/17. This is likely to accelerate from inter-market weakness across related risk proxies such as EUR/USD and equity markets. Moreover, there is still heightened risk for a much larger decline if we confirm a weekly close beneath $1600/16 and $1530 (200-day MA/swing

DEMARK SIGNAL WARNED OF GOLDS OVERBOUGHT CONDITIONS

$1800 $1760

20% SO FAR

$1600

34%
200-DMA NOT BROKEN IN 3 YEARS!

low), which has not been breached in 3 years! 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).

$1532

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

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 Bloomberg Countdown CNBC Squawk Box
(BLOOMBERG & CNBC REPORTS)

VIDEO

MIG Bank Gold Webinar video

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

II

S-T TREND

L-T TREND

STRATEGY
SHORT 3: 1705, Obj: 1605, 1530, 1300, Stop: 1750

Gold weekly, daily chart and 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

13 December, 2011

Key support at $30.0000.

13

Silver (Daily)

Silver is holding around 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 major sell-off in September. Such a dramatic move traditionally produces

200 DMA (36.9204)

II

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

38.2%

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

(32.3135)

Gold/Silver "Mint" Ratio

50%

(26.9150)

resumption higher. Continue to watch the gold-silver mint ratio which has now accelerated

61.8%

higher by 70%, suggesting further risk aversion over the next few weeks. This also helps explain recent divergences between gold and silver.

(21.5165) 13 YEAR LEVEL

UNWINDING 70% FROM OVERSOLD TERRITORY

OVER

30 YEAR BASE PATTERN

BULL MARKET FROM 1999

Silver Monthly (since 1980)

S-T TREND

L-T TREND

STRATEGY
SHORT 3: 34.1300, Obj: 29.9700/26.0700/23.3400, Stop: 34.1300

Spot Silver daily and weekly 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

13 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

13 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