DAILY TECHNICAL REPORT

8 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

SHORT 3 34.1300 Sell limit 3 Sell limit 3 0.8700 1.2480

Await New Sell Trade Setup. Await fresh signal. Await New Buy Trade Setup above 80.00. Await fresh signal. Awaiting New Buy Trade setup. Awaiting New Buy Trade Setup. Missed sell at 123.00. Await fresh signal. Await fresh signal. 0.8565/0.8485/0.8285 1.2380/1.12226/1.1973 Awaiting New Sell Trade Setup. 29.9700/26.0700/23.3400 (Entered 01/11/2011) 34.1300 0.8835 1.2580

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

8 December, 2011

EUR/USD (Daily)

BERMUDA TRIANGLE

FAILED
BREAKOUTS

Holding pattern favours a resumption back into 1.3146.

EUR/USD is continuing to trade within a short-term holding pattern, which is unwinding from last weeks sharp recovery (as six central banks, reduced their USD funding costs to ease the debt crisis). Our cycle analysis also

BREAKOUT ZONE

suggests increased volatility within the first two weeks of December. The recovery is still expected to be limited into 1.3610, then 1.3730 and

(1.4000)

200-DMA (1.4080)

1.3000 (PSYCHOLOGICAL) 1.2870 (2011 MAJOR LOW)

perhaps even 1.3850-90. Probability also favours a bearish reversal at these levels for a resumption back into 1.3146 (04 Oct swing low). A sustained close beneath 1.3146 will re-establish the larger downtrend from April and target 1.3000 (psychological level), then 1.2870 (2011 major
th

UPTREND (2 YEARS)

EUR/USD weekly chart, Bloomberg Finance LP

USD INDEX
200-DMA (75.80)
9 MONTH HIGH
EUR 57.6%, JPY 13.6%, GBP 11.9% CAD 9.1%, SEK 4.2%, CHF 3.6%

low). 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).
Special Report: EUR/USD A Fall From Grace ? Decline Targets 1.3770/1.3410.

BREAKOUT ZONE
DEMARK BUY SIGNAL

VIDEO

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

13
DEMARK BUY SIGNALS

KEY SUPPORT (73.50-73.00)

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

S-T TREND

L-T TREND

STRATEGY
Awaiting New Sell Trade Setup.

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
Rises to re-test the 1.5726 level.

DAILY TECHNICAL REPORT

8 December, 2011

GBP/USD saw a minor surge higher during afternoon trade yesterday. This followed a failed break to the downside which met support at 1.5561. A break over 1.5726 has now been realised, potentially initiating a further extension higher, moving comfortably back into the old range that existed during the last calendar year. We now wait to see if an extension higher can be realised, as this would be suggestive of a larger recovery higher, thereafter. We remain alert to the fact that we are nearing the base of the year long range which, given the short-term relief seen in the Euro-Zone, may offer opportunities to enter long positions. GBP/USD daily chart, Bloomberg Finance LP This may also be advantageous if

rising yields return to the Euro-Zone and Sterling attains a safe haven status once again. 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

DAILY TECHNICAL REPORT

8 December, 2011

POST INTERVENTION RETRACEMENT (PIR I)

Weakening beneath 78.24 (DeMark Level).

USD/JPY is weakening beneath 78.24 (DeMark Level). There is an ever growing probability of unfolding a third price retracement back to pre-

QUAKE SHOCK! 83.30

POST G7 MOVE (I) HIGH

intervention 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
82.00

to call the market bottom. 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 major long-term 40-year cycle upside reversal. Expect key cycle inflection

USD/JPY Weekly (2007 2011)

ENDING DIAGONAL PATTERN ANTICIPATE SBREAKOUT (85-79)

PIR II

POST BOJ MOVE (III) HIGH

PIR III

points to trigger into November-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

8 December, 2011

Sustained over 0.9331 to target 0.9776.

USD/CHF has a short-term structure that is suggestive of a complete leg higher from the 0.8568 low. This now acts to emphasise the 0.9331 high as being pivotal to further gains. If a break above this level can be achieved, this will be suggestive of a larger swing, to potentially target 0.9776. However, given events elsewhere, the fall from 0.9331 to 0.9066 is likely the first leg lower in a larger corrective phase which may be affected by a return to rising yields in the core bond markets of the Euro-Zone. With this in mind, we note that the respite that was offered to 10 year Italian government bond yields following the USD based swap rate cut may be nearing completion. The current trading zone near 5.750% is expected to USD/CHF daily chart, Bloomberg Finance LP see strong support, with the potential of a return back towards 7.00% over coming weeks. If upside pressure were to return to Italian and Spanish yields then USD/CHF will likely experience a degree of downside pressure too. Spanish and Italian government bonds have seen a reasonable sized pullback over the last week, currently trading at 5.405% and 5.924% versus 6.478% and 7.355%, before the six party central bank agreement. (These same yields were trading at 5.187% and 5.777% respectively at the same time yesterday.)

USD/CHF 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 5

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

DAILY TECHNICAL REPORT

8 December, 2011

Sharp Setbacks hold steady at 1.0080.

USD/CADs sharp setbacks are holding steady, following the recent shortterm DeMark exhaustion sell signal and has found support at 1.0080
CONFIRMATION ABOVE 1.0680 OPENS LARGER RECOVERY

A directional confirmation above 1.0658 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 0.9861 and 0.9726 (31 Aug low).
st

200-DMA (0.9861)

DEMARK BUY SIGNAL

EUR/CAD has accelerated its decline (-4% in 13 days) and is now targeting the base of an important multi-month distribution pattern. A break beneath
th

USD/CAD daily, weekly charts, Bloomberg Finance LP

MAJOR RESISTANCE

1.3393-79 (19 Sept low/61.8% 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, has also weakened sharply 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.% Fib
st

CHF/CAD (Daily)
REVERSAL PATTERN

50%

200-DMA (1.3876)

retrace). A 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)

EUR/CAD (Daily)

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)

DAILY TECHNICAL REPORT

8 December, 2011

DEMARK SELL SIGNALS

AUD/USD
(Weekly)

Consolidating beneath its 200-day MA at 1.0405.

AUD/USD is consolidating beneath its 200-day MA which is currently holding at 1.0404. This key level is likely to cap further potential gains.
STRUCTURAL LEVEL

The bears must sustain below 1.0000 to further compound downside pressure on the rates multi-year uptrend and push back towards 0.9611.
3 YEAR UPTREND IS UNDER PRESSURE

38.2%

(0.9144)
50%

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 is holding its mild recovery against the Japanese yen, while trading back above the neck-line of its two-year distribution pattern. Watch for further downside scope into support at 72.00 which would signal further unwinding of global risk appetite.

(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

REVERSING INTO 200-DMA 38.2%

(76.70)
50%

200DMA (82.50)

(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
Awaiting New Sell Trade Setup.

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

8 December, 2011

Rangebound since the start of December.

GBP/JPY has failed to gain any downside momentum, given the breakdown from an hourly rising wedge. This failure to gain downside momentum is consistent with movement in GBP/USD, which is suggestive of Sterling being used as a safe haven, while uncertainty remains within the EuroZone. 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. If a return to and break over 122.64 can be achieved and sustained, this will suggest scope for a larger recovery higher back towards 127.32. This ties GBP/JPY daily chart, Bloomberg Finance LP in to a medium-term expectation of a much larger corrective swing higher, potentially back to 163.09. 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 further leg higher would be favoured to develop. A failure to hold over 119.38 will warn of a return to 116.84.

GBP/JPY hourly chart, Bloomberg Finance LP

S-T TREND

L-T TREND

STRATEGY
Missed sell at 123.00. 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

8 December, 2011

Sideways market continues for now.

EUR/JPY is exhibiting many of the same characteristics as a host of currency pairs in the approach to the Christmas holidays. Most importantly the recent bout of intervention by various central banks warns of a period 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. We view the fall that has taken place since 111.60 as being corrective in nature, suggesting potential for a return to this same level. However, in the shorter-term timeframe a corrective phase appears to have completed at 105.70. Thus we have a directional clash in two timeframes. EUR/JPY daily chart, Bloomberg Finance LP The EUR component of this pair is clearly affected by the movement in EUR/USD. A break under 1.3146 in EUR/USD will end the rising phase seen since 2010. This would likely be associated with a fall back down to 100.76 and potentially lower. Given the above clash between the structure and events in the Euro-Zone, we prefer to wait on the side lines. A sustained hold over the 200 day moving average will turn the mediumterm outlook more bullish.

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
Rangebound while above 0.8486.

DAILY TECHNICAL REPORT

8 December, 2011

EUR/GBP continues to trade within the 0.8486 - 0.8665 range, reaching 0.8511 yesterday. While above 0.8486 scope is seen for a rise back

towards 0.8700 to complete a larger corrective phase from the 0.8486 level. In fact false breaks lower have been a hall mark of this currency pair in multiple timeframes, so the strategy to sell higher will be maintained. We continue to expect a return to rising yields within the Euro-Zone and it is within this environment that we see the potential for Sterling to be perceived as a safe haven. Core government bond yields have eased back somewhat after the coordinated cut in USD based swap lines amongst selected central banks. However, a lasting solution still appears a long way off. The fact that there is a high demand for US Dollars from European banks is a EUR/GBP daily chart, Bloomberg Finance LP warning sign and a clear weakness suggesting scope for a credit contractionary phase. Our bias remains mildly bearish with trade continuing under both the 200 day and 50 week moving averages. As mentioned in prior reports the

1.3146 level in EUR/USD remains key. A push under this level will likely lead to weakness in all EUR crosses, as it will mark a breakdown in confidence in the EUR and also end the rising trend that has been witnessed since the 1.1876 low seen in the middle of 2010.

S-T TREND

L-T TREND

STRATEGY
Sell limit 3 at 0.8700, Objs: 0.8565/0.8485/0.8285, Stop: 0.8835.

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

8 December, 2011

Signs of supply seen close to the recent 1.2500 ceiling.

EUR/CHF Met supply again yesterday close to the 1.2500 ceiling that has capped this pair for the last two months. However we will maintain our sell limit strategy at 1.2480 as it represents a reasonable trade location if short stops are targeted in thin Christmas markets. The return to the upper end of the recent trading range has been assisted by the six central bank dollar swap rate coordination. A rising sovereign yield environment is anticipated to return to the core of the Euro-Zone, which should assist the mild bearish bias, however, pushing back under 1.2123/31 represents the real goal of a lasting breakdown in the recent range bound structure. EUR/CHF weekly chart, Bloomberg Finance LP The chance of collusion of central banks has made the current environment difficult to trade from a technical perspective as free market movement is one of the main assumptions of this analytic technique. The repeated failure of this pair to break over the 50 week moving average over recent weeks is also an initial warning that the prior downtrend may not be over. The large cluster of stops that is likely to be placed around the 1.2000 level is also anticipated to aid any short positioning, questioning the ability of the SNB to hold back the possible flow of funds into Swiss Francs.

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 TRIGGER LEVELS
DOWNSIDE: $1600 / $1530 UPSIDE: $1760 /$1800

DAILY TECHNICAL REPORT

8 December, 2011

RISK ZONE III

DOUBLE TOP

Remains negative beneath $1800.

Short-term price activity remains negative beneath resistance at $1800, despite the recent push higher. Only a close above here would develop a more sustained recovery into $1845. Near-term support can be found at $1667 (21 Nov low). Moreover, there is still heightened risk for a much larger decline if we confirm a weekly close

DEMARK SIGNAL WARNED OF GOLDS OVERBOUGHT CONDITIONS

$1800 $1760

20% SO FAR

$1600

34%
$1532
BREAKOUT 200-DMA NOT BROKEN IN 3 YEARS!

beneath $1600/04 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

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

lower into $1300 and perhaps even $1040 - 1000. 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 in the near future.

COT NET LONG SPECULATOR POSITIONS

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

VIDEO

Bloomberg Countdown

CNBC Squawk Box

MIG Bank Gold Webinar video

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

(BLOOMBERG & CNBC REPORTS)

II

S-T TREND

L-T TREND

STRATEGY
Awaiting New Sell Trade Setup.

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
Key support at $30.0000.
Silver HITS 1980 Spike High!

DAILY TECHNICAL REPORT

8 December, 2011

Silver (Daily)

DEMARK SELL SIGNAL DEMARK SELL SIGNALS

13

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

200 DMA (36.9638)

II

recover and accumulate renewed buying interest. Expect a large trading range to hold between $37.0000-26.0700 over the

KEY SUPPORT (26.0700)

multi-week/month horizon, with downside macro risk into $21.5165 (61.8%

38.2%

(32.3135)

Fib-1999 bull market) and $20.0000. This would still maintain silvers longterm uptrend and help offer a potential buying opportunity for the eventual

Gold/Silver "Mint" Ratio

50%

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.

(26.9150)

61.8%

(21.5165) 13 YEAR LEVEL

UNWINDING 70% FROM OVERSOLD TERRITORY

This also helps explain recent divergences between gold and silver.

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

8 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

8 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