DAILY TECHNICAL REPORT

14 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 2

ENTRY LEVEL 1.3280

OBJECTIVES/COMMENTS

STOP

1.2990/1.2870 (Entered 12/12/2012) Await fresh signal. Await new buy trade setup above 80.00.

1.3280

Buy limit 3

0.9410

0.9550/0.9680/0.9776 Awaiting new buy trade setup.

0.9310

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

SHORT 3

1.0050

0.9950/0.9660/0.9380 (Entered 13/12/2011) Await fresh signal.

1.0210

Buy limit 3 Sell limit 3 Sell limit 3 SHORT 3 SHORT 3

101.05 0.8510 1.2480 1705 34.1300

102.05/105.00/107.68 0.8395/0.8300/0.8142 1.2380/1.2226/1.1973 1605/1530/1300 (Entered 12/12/2012) 29.9700/26.0700/23.3400 (Entered 01/11/2011)

100.05 0.8615 1.2580 1750 34.1300

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

14 December, 2011

Bears push into 1.3146 after rating warning from Moodys.

First objective met at 1.3140. Stop moved to entry. 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. Price has now broken 1.3146 (Oct swing low). We remain short favouring downside scope. Our cycle analysis suggests increased volatility over the next two weeks across risk proxies, including the equity and commodity markets. Yesterdays close beneath 1.3146 re-establishes the larger downtrend from April and targets 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 daily chart, Bloomberg Finance LP and 1.3730. Any rebound into these levels is likely to be short-lived. Inversely, the USD Index is maintaining its recovery higher and has met 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 strong and 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

www.migbank.com

S-T TREND

L-T TREND

STRATEGY
SHORT 2: 1.3280, Objs: 1.2990/1.2870, Stop: 1.3280

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

GBP/USD

DAILY TECHNICAL REPORT

14 December, 2011

Break over trend-line off 1.5770 sought before attempting longs.

GBP/USD has managed to break out of its prior sequence of lower lows and higher highs, forming an hourly falling channel. This may mark the end of the corrective phase off 1.5780. However, a break over the hourly channel resistance is sought before attempting longs. 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 Failure to remain above 1.5423 will see an immediate target at 1.5272 and then and the potentially trend-line support at 1.5110.

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

DAILY TECHNICAL REPORT

14 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 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. This may 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 into December this year, offering a sustained move above our upside trigger level at 80.00/60, then 82.00 and 83.30.

USD/JPY daily, weekly chart, Bloomberg Finance LP

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 Bloomberg

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

14 December, 2011

Short-term structure continues to favour extension higher.

Buy limit raised to 0.9410. Stop raised to 0.9310 and objectives adjusted as detailed below. An earlier break over 0.9555 without filling this strategy will negate this strategy and lead to us removing it from the report. USD/CHF saw a minor retrace after breaking clear of the old 0.9331 high yesterday. The near-term structure exhibited on the hourly charts continues to suggest scope for a test of the region close to the March high at 0.9776. 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 daily chart, Bloomberg Finance LP USD/CHF. favoured. 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 5.699% and 6.685% versus 6.478% and 7.355%, before the agreement. (These yields were trading at 5.881% and 6.684% 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 0.9410, Objs: 0.9555/0.9680/0.9776, Stop: 0.9310

www.migbank.com

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

USD/CAD
Bulls rebound above 1.0200.

DAILY TECHNICAL REPORT

14 December, 2011

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. 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). 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% USD/CAD daily chart, Bloomberg Finance LP 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 break here would extend the sharp decline into 1.0332 (01 March low) and help confirm further unwinding of global risk appetite.
st th st

USD/CAD hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Awaiting new buy trade setup.

www.migbank.com

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

AUD/USD

DAILY TECHNICAL REPORT

14 December, 2011

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 1.0413. This key level is likely to encourage further downside scope over the multi-day-week horizon. The bears must sustain below 1.0000 to further compound downside 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 AUD/USD daily chart, Bloomberg Finance LP unwinding of global risk appetite.

AUD/USD hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
SHORT 3: 1.0050, Obj: 0.9950/0.9660/0.9380, Stop: 1.0210.

www.migbank.com

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

GBP/JPY

DAILY TECHNICAL REPORT

14 December, 2011

Channels lower in a possible corrective structure.

Sell strategy removed. Await fresh signal. GBP/JPY has been largely contained within a falling hourly channel for the majority of December. This structure is seen as being part of a corrective phase with an eventual return to strength anticipated, potentially close to the 120.00 region. However, the recovery seen from the 116.84 low appears corrective in nature, suggesting scope for a return to 119.38 and then potentially 116.84. If the recent range bound trade is resolved to the downside, then the 120.00 level should provide a degree of support, from where a short-term leg higher would be favoured to develop. GBP/JPY daily chart, Bloomberg Finance LP

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

14 December, 2011

Support anticipated close to 100.76.

EUR/JPY has been greatly affected by the recent fall under 1.3146 in EUR/USD, particularly in light of the recent static nature of USD/JPY. This has seen a break under 102.49 yesterday. However, the 100.76 level is seen as potentially offering strong support. As mentioned in prior reports, 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. Even if a lower low were to be printed, an initial recovery from the 100.76 region is anticipated. With this in mind we look to attempt longs just ahead of the key 100.76 level. EUR/JPY daily chart, Bloomberg Finance LP Sustained under this level will warn of a much larger continuation lower.

S-T TREND

L-T TREND

STRATEGY
Buy limit 3 at 101.05, Objs: 102.05/105.00/107.68, Stop: 100.05

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

14 December, 2011

Retrace back towards old trend-line support sought.

EUR/GBP has broken under 0.8486 which was followed by a re-test of this same level yesterday, ahead of further weakness. This now highlights an emerging falling channel as shown in the daily chart to the right. We await a re-test of the old trend-line support as resistance ahead of possible short positioning. We also note that 1.3146 has now been broken in EUR/USD, weakening the longer-term outlook there. This may assist a short EUR/GBP bias going forward. An initial target for the current downswing in the daily timeframe is on the support of the previously mentioned falling channel, currently at 0.8330. EUR/GBP daily chart, Bloomberg Finance LP 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 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.

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
Messy sideways trade continues.

DAILY TECHNICAL REPORT

14 December, 2011

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 from 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 towards 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

DAILY TECHNICAL REPORT

14 December, 2011

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 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). 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 weekly and daily charts, Bloomberg Finance LP

S-T TREND
www.migbank.com

L-T TREND

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

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

SILVER
Key support at $30.0000.

DAILY TECHNICAL REPORT

14 December, 2011

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 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 silvers longterm uptrend and help offer a potential buying opportunity for the eventual resumption higher. Continue to watch the gold-silver mint ratio 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 daily and weekly charts, Bloomberg Finance LP

S-T TREND
www.migbank.com

L-T TREND

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

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

LEGAL TERMS

DAILY TECHNICAL REPORT

14 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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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

14 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